Consumer Behaviour in Rural Market in India

2012-13 CONSUMER BEHAVIOUR IN RURAL INDIA

S.KHWAJA NIJAM TAMSUDDEN WESTERN COLLEGE OG COMMERCE & BUSINESS MANAGEMENT 2012-13

Rural marketing

CONSUMER BEHAVIOUR IN RURAL INDIA

“ To analyze the marketing of consumer behaviour(both durable and non durable products) in rural areas.‖

SUBMITTED BY: SHAIKH KHWAJA NIJAM TAMSUDDEN TY.BMS(2012-2013)

UNDER THE GUIDANCE OF: MRS.DEEPA MAKKAD FACULTY

WESTERN COLLEGE OF COMMERCE & BUSSINESS MANAGEMENT, NAVI MUMBAI. MUMBAI UNIVERSITY – MAHARASHTRA

Rural marketing Acknowledgement I take this opportunity to express my profound gratitude and deep regards to my guide Professor.DEEPA MAKKAD for his exemplary guidance, monitoring and constant encouragement throughout the course of this thesis. The blessing, help and guidance given by him time to time shall carry me a long way in the journey of life on which I am about to embark.

Lastly, I thank almighty, my parents, brother, sisters and friends for their constant encouragement without which this assignment would not be possible.

SHAIKH KHWAJA NIJAM TAMSUDDEN

Rural marketing TOPIC INTRODUCTION 1  PARADIGM 2 3

 ATTITUDE TOWARD CONSUMERISM

4

 Rural Marketing

5

 Nature of Rural Market

6

 Classification of rural consumers

7

 Special Products for Rural Markets:

8

 CONSUMER BEHAVIOR IN RURAL MARKETS:

9

 Factors influencing buying behavior

10

 4 A’s approach of Indian Rural Market

11

 Evolving a New Marketing Mix for Selling to Rural Indians

12

 SEGMENTATION OF RURAL MARKET

13

 BRAND PROMOTER

MARKETING

AND

Rural marketing 14

 Suggestions &recommendations

15

 CONCLUSION

1. INTRODUCTION

India’s way is not Europe’s. India is not Calcutta and Bombay. India lives in her seven hundred thousand villages.....................Mahatma Gandhi, 1926 Consumer behavior in the rural market is even more perplexing because of a singular lack of consistency in groups which are homogeneous in parameters of demographics, Age, occupation, education and income. Most marketers realize that India is on the cusp of momentous change. The economy is vibrant, incomes are rising & the habits, preferences & attitude are changing rapidly. But nowhere is it more evident than in rural India. There is, thus an emerging need to build expertise in rural marketing. There are three challenges that rural marketers must overcome. The first of this is the challenges of reach-markets in the rural India that are small & scattered making them inaccessible & unreliable or both. But this problem is not new & many companies let it hamper them unduly even as others overcome it with innovation. The next challenge is to ensure that the consumers are aware of your brand and want it. The third challenge in RM is influence. It is an old saying that customer is the king because he is the person whose decision have affect on the demand of any product or service. The attitude of consumer or buyer decides how demand will emerge for a new product & service & how existing goods and services would survive in future and in which manner. The study of consumer

Rural marketing behavior implies how & why a particular consumer reacts to the decisions of producers. The study of consumer behavior is the study of how individual make decision to spend their available resources (time, money, effort) on consumption related items. It includes the study of why they buy it, when they buy it, where they buy it, how often they buy it & how often they use it.

 STAGES IN THE BUYING PROCESS Consumers pass through five stages while making a purchases decision. In low involvement rural and urban consumers may skip some of these stages. A woman buying her regular brands of daily use, groceries will identify the need and purchases from the shop, skipping two stages. It is in the purchase of high-involvement products that a rural consumer display different motives relating to the problem recognition, source of information, Evaluation procedures, collective decision and different post purchase behavior. This creates need to treat each stage of the marketing process differently for rural and urban consumers.  Stages in the buying process Problem Recognition ↓ Information search ↓ Evaluation of alternatives ↓ Purchase decision ↓ Post-purchase behavior In competitive environment one cannot thrust a product on consumer. He has to produce what is demanded or what can be demanded. Some of the

Rural marketing advantage of study of consumer behavior is as under• Saves from disaster. • Helps in formulating right marketing strategy. • Helps in sales promotion. • Helps in development of new products. • Helps in product orientation. • Helps consumer to study their behavior.  UNDERSTANDING RURAL CONSUMER In the initial years the focus was on the easily accessible well developed urban market. Soon there was proliferation of brands and intense competition resulting in the near saturation of the urban market. This forced companies to go for greener a pasture that is new markets. All eyes turned to the world most promising potential market of 742 million rural consumers, who had yet to taste the fruit of modernity.A promise that seemed ready to be fulfilled because of explosion in the buying capacity in the rural sector.

 SEVERAL MYTH ABOUT THE RURAL SECTOR • The belief that rural people do not buy brands. • The belief that rural customer buy cheap products. In reality they seek value for money. • The belief that the rural market is homogenous mass. In fact it is fascinatingly heterogeneous. The census of India defines rural as any habitation with a population density of less than 400 per square kilometers where at least 75% of male working population is engaged in agriculture & where there exists no municipality or board leaning aside Hindustan Uniliver Limited & ITC, most companies in the FMCG sector would define rural as any place with the population up to 20,000.

Rural marketing

Rural consumers are fundamentally different from their urban counterparts & different rural geographies display considerable heterogeneity calling for rural specific & region specific strategies e.g. a farmer in rural Punjab is much more progressive than his counterpart in Bihar. A farmer in Karnataka is far more educated than one in Rajasthan & so on. An urban individual is free to take independent purchase decision. In a village, because of strong social structure, including caste consideration and low literacy level, community decision making is quite common. Companies face many challenges in tackling the rural markets. Marketing is all about ―Getting to know your customer‖. But having largely ignored this cardinal principle, most corporate in rural markets find that success has eluded them. The rural market account for market worth of 27$ billion. About 285 millions live in urban India whereas 792 million resides in rural areas. 72% of India‘s population resides in its 600000 villages. Many companies like ColgatePalmolive, HCL & Godrej etc. have already furrows into rural households but still capturing the market is a different dream. For quite sometime now, the life of the rural India has been the subject of animated discussions in the corporate suites, with the urban markets getting saturated for several categories of consumer goods and with rising rural income. For example, Tata chemicals ran a chain called Tata Kisan Kendra which offered services ranging from agriculture input to financing to advisory services. Hindustan Levers is offering deals to farmers to cover operation from the pre harvest to post harvest stage. Mahindra & Mahindra limited, India‘s largest farm equipment company & its subsidiary Mahindra Shubhlabh services has operated in eleven states with 7 lacs strong Mahindra tractor customer base& 400+ dealers provide a complete range of products and services to improve farm productivity and establish market linkages to the commodity market chain. The objective of this article is therefore threefold. The first objective is to develop a framework used to study consumer behavior in rural market. The

Rural marketing second objective is to apply this frame work to examine and understand consumer behavior in rural areas. The last objective is to prefer generalization and recommendation to those wishing to market their product\services in the rural market  PARADIGM Many comprehensive theories/models have been developed within the field of consumer behavior (HARWARD and SHETH 1969; NICOSIA 1966). Models have also been developed for specific context, such as for family decision making and information processing. These theories have played an important role by detailing how various factor influence consumer behavior. An extensive review of literature reveals that there is no simple framework that lends itself to a comprehensive study of consumer behavior. The paradigm proposed four sequential stages to represent the purchase and consumption processes. These four stages are named as Access, Buying behavior, Consumption characteristics and Disposal.  STAGES OF THE PARADIGM The four stages are briefly described below:1 ACCESS- the first step is to provide access to the product/services for consumer within rural areas. Access pertains to physical access as well as the economic access. BUYING BEHAVIOR- this stage encompasses all factors impacting decision making and choice within a rural area. Example of these factors includes perception, attitude and consumer responses such as brand royalties. CONSUMER CHARACTERISTICS- the specific products/services that are purchased and consumed may be different in each area. The cultural orientation and serial class distribution will determine consumption pattern within a culture. DISPOSAL-many rural areas are becoming more environmentally

Rural marketing conscious and are moving away from throw away products. Hence marketers need to design systems to facilitate the safe disposal, recycling, resale of products. They also meet their social responsibilities especially in relation to public safety and environmental pollution. ACCESS Access can be divided into 2 types namely a) Economic access b) Physical access Economic access relates to the issue of affordability of the product/ service for the rural population. According to NCAER the low penetration rates can be attributed to 3 major factors namely: low income level, inadequate infrastructure facility and different lifestyle. Normally, the rural consumer spend the majority of their income in basic necessities which makes them price sensitive The first factor influencing physical access is the country infrastructure which is comprised of essential service such as transportation system, communication system, utilities and banking system. Infrastructure not only has a tremendous impact on the age of conducting business in the country but is also vitally important for the future economic growth of India. The second factor influencing physical access is a distribution strategy. The company can use delivery van which can serve two purposes: a) It can take the product to the customers in every nook n corner to the market it enables firm to establish direct contact and facilitates sales promotion, annual ―melas‖ organized are quiet popular and provide a very good platform for distribution because people visit them to make several purchases. For easy access of once own fund, ICICI bank has developed low cost automated teller machine (ATM) designed for rural areas and is aimed at increasing micro finance in rural India.

Rural marketing  POOR-QUALITY RETAIL OUTLETS b) Retail outlets in rural area are often characterized as insufficient, time consuming and frustrating. Companies therefore, have to be creative and learn to work around these constraints. The retail establishment where most rural consumers purchase their dayto-day goods is at a Kirana or street shop. Consumers purchase everything from Banana to razors at a kirana with over 2.5 millions kiranas Indian rural town and village. In order to reach these local shop and establish a brand presence in them companies need substantial amount of working capital and large committed sales force.

 BUYING BEHAVIOR: Once the marketer has insured both economic and physical access to its product it needs to evaluate the buying behavior of consumers in rural areas. To understand the buying behavior of rural consumers, we must go to the factors that influence their buying behavior. The factors include: 1. Socio-economic environment of the consumer 2. Cultural environment 3. Geographic location 4. Education/literacy level 5. Occupation 6. Exposure to urban lifestyles 7. Exposure to media and enlarged media reach. 8. The points of purchase of products. 9. The way the consumer uses the products 10. Involvement of others in the purchase. 11. Marketers effort to reach out the rural markets. Some of these points are discussed in some detail below:

Rural marketing INFLUENCE OF CULTURE: Culture and tradition influence perception and buying behavior. For example, the preference in respect of color, size and shape is often the result of cultural factors. Rural consumers‘ perception of products is strongly influenced by cultural factors. GEOGRAPHIC LOCATIONS: Rural consumer behavior is also influenced by the geographic location of the consumers. For example, nearness to feeder towns and industrial projects influence the buying behavior of consumers in the respective clusters of villages. We are discussing this aspect in detail in the section on market segmentation in rural markets. To cite one more example of how geographic location affects buying behavior, we can point out the fact that the lack of electricity in many rural households acts as a barrier to the purchase of certain consumer durables. EXPOSURE TO URBAN LIFESTYLES: Extent of exposure of rural consumers to urban lifestyles also influences their buying behavior. An increased exposure and interaction with urban communities has been the trend in recent years. THE WAY THE CONSUMER USES THE PRODUCTS: The situation in which the consumers utilize the product also influences their buying. The example of lack of electricity affecting buying behavior illustrates this point as well. Lack of electricity automatically increases the purchase of batteries by rural consumers. Similarly, since rural consumers cannot use washing powders/detergent powders that much, as they wash their clothes in streams or ponds, they go in more for washing bars and detergent cakes. PLACES OF PURCHASE: Buying behavior of rural consumer also varies depending on the place of purchase. Different segments of rural buyers buy their requirements from different places/outlets. Some buy from the village shopkeepers; some from village markets/fairs; others buy from the town that serves as the feeder to the rural area. It is also seen that the same buyer buys different requirements from different laces. For understanding the buying behavior of the rural consumer correctly, the

Rural marketing marketer must ask the question: Where from do they buy the products and why?

MARKETERS EFFORTS TO REACH OUT THE RURAL MARKET: In recent years, many corporate companies have been trying hard to develop a market for their products in the rural areas, investing substantially in these areas. This has brought about some change in the way buyers purchase different products. Developmental marketing has created discriminating buyers and hitherto unknown demand in the rural market. All the above factors influence the buying behavior of rural consumer and hence their responses to the marketing mix variables, and the reference points they use for purchase decisions. BRAND EQUITY: Brand equity is another aspect of perception. Some of the brands like Colgate, Marlboro are popular brands in rural areas. It might therefore be advantageous to retain these brand names and packaging in rural areas, although companies might want to use the local language on the package itself. PRICE-QUALITY RELATIONSHIP: The next aspect of perception is price quality relationship. Mostly rural area consumers rely on word of mouth communication more than price as a means to judge quality.  ATTITUDE TOWARD MARKETING AND CONSUMERISM Consumer protection has historically not given in India especially in rural market. And government has recently attempted to set up consumer forums. The growing number of rural people working in urban India, but continuing to live in their villages, has brought an item of conspicuous consumption into the village. This is supplemented by villagers who have migrated to urban India, but visit their village during holidays with gifts for their family and friends. This has stoked the curiosity of hitherto satisfied

Rural marketing villagers.

 RURAL PENETRATION Increasing penetration of non essential items (per thousand) FMCG

1998-99

2004-05

Body talcum power Face Cream Packaged biscuit

452 80 185

624 285 415

DURABLES Motorcycle Refrigerator TV(color)

1998-99 16 14 18

2004-05 50 60 80

 CONSUMPTION CHARACTERISTICS: India per capita income measured in terms of purchasing power parity estimated at US $ 2,230 against US $ 440 calculated by conventional method by translating rupees into Dollar at the prevailing exchange rate. Purchasing power parity has been used for comparison to capture available data through certain studies conducted by National council of applied Economic Research in 1996 and 2002. These studies have attempted to classify the consumer goods market according to the consumption behavior of its constituents. Cultural pattern in rural areas determine whether a culture is traditional or modern in its outlook and that is a factor that can have a major impact on consumption pattern.  DISPOSAL Extended channels of distribution provide numerous options for consumers who wish to move still useful but unwanted products to other consumers. The rationales that consumers use in choosing disposal options, including

Rural marketing those resulting in redistribution, are described. Affect and demographic correlates for each disposition tendency provide information to help develop consumer behavior theory regarding redistribution, as well as provide strategic implications for extended channels.  LIVE EXAMPLES : • ITC international business division has conceptualized the e – chaupal as a chain of internet kiosk connected through VSAT to facilitate procurement of specific commodities. Each kiosk is a part of hub-and –spoke model. This echaupal which offers the farmers all the information, product and services they need to enhance farm productivity. • n-Logue communication was set up by the telecommunication and computer network(Tenet) of I.I.T., a group which is dedicated to evolving technically superior and cost effective solution for a country like India. nLogue is a business providing internet ,voice, e governance, and other rural services through a network,. • The project I-Shakti kiosk set up by H.U.L. in partnership with women self help group in Andhra Pradesh have received an overwhelming response from the local people. The kiosk offer information chiefly in the form of audio visuals in the following area: 1. Health and hygiene 2. E-governance 3. Education 4. Agriculture 5. Employment 6. Legal services • The government of Madhya Pradesh initiated the GYANDOOT project in January 2000.in DHAR district Madhya Pradesh. The project include the installation of rural internet connecting 20 kiosk in the village panchayat centers Asian Journal of Technology & Management Research

Rural marketing

 Rural Marketing

Rural marketing involves the process of developing, pricing, promoting, distributing rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational objectives.

URBAN

RURAL

RURAL

URBAN

RURAL

RURAL

It is a two-way marketing process wherein the transactions can be:  Urban to Rural: A major part of rural marketing falls into this category. It involves the selling of products and services by urban marketers in rural areas. These include: Pesticides, FMCG Products, Consumer durables, etc.  Rural to Urban: Transactions in this category basically fall under agricultural marketing where a rural producer seeks to sell his produce in an urban market. An agent or a middleman plays a crucial role in the marketing process. The following are some of the important items sold from the rural to urban areas: seeds, fruits and vegetables, milk and related products, forest produce, spices, etc.  Rural to Rural: This includes the activities that take place between two villages in close proximity to each other. The transactions relate to the areas of expertise the particular village has. These include

Rural marketing selling of agricultural tools, cattle, carts and others to another village in its proximity.

 Nature of Rural Market Large, Diverse and Scattered Market: Rural market in India is large, and scattered into a number of regions. There may be less number of shops available to market products. Major Income of Rural consumers is from Agriculture: Rural Prosperity is tied with agriculture prosperity. In the event of a crop failure, the income of the rural masses is directly affected. Standard of Living and rising disposable income of the rural customers: It is known that majority of the rural population lives below poverty line and has low literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has created disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him. Traditional Outlook: Villages develop slowly and have a traditional outlook. Change is a continuous process but most rural people accept change gradually. This is gradually changing due to literacy especially in the youth who have begun to change the outlook in the villages. Rising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed about the world around them. They are also educating themselves on the new technology around them and aspiring for a better lifestyle. Diverse socioeconomic background: Due to dispersion of geographical

Rural marketing areas and uneven land fertility, rural people have disparate socioeconomic background, which ultimately affects the rural market. Infrastructure Facilities: The infrastructure facilities like cemented roads, warehouses, communication system, and financial facilities are inadequate in rural areas. Hence physical distribution is a challenge to marketers who have found innovative ways to market their products.

Some Myths: Myth-1: Rural Market Is a Homogeneous Mass Reality: It‘s a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords; Traders, small farmers; Marginal farmers: Labors, artisans. State wise variations in rural demographics are present viz. Literacy (Kerala 90%, Bihar 44%) and Population below poverty line (Orissa 48%, Punjab 6%). Myth-2: Disposable Income Is Low Reality: Number of middle class HHs (annual income Rs 45,000- 2, 15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 1993-94. Myth-3: Individuals Decide About Purchases Reality: Decision making process is collective. Purchase processinfluencer, decider, buyer, one who pays can all be different. So marketers must address brand message at several levels.Rural youth brings brand knowledge to Households (HH).

Rural marketing

Is rural marketing transactional or developmental in its approach? It is true, rural markets have become an attractive proposition for commercial business organizations. The role of rural marketing as such is more developmental than transactional. It is more a process of delivering better standard of living and quality of life to the rural environment taking into consideration the prevailing village milieu. Transactional Vs Developmental: For better comprehension of this role let us distinguish development marketing and transactional marketing. Table brings out the differences in brief. Transactional Vs Development Marketing S.N o 1.

Aspect

2.

Role

3. 4.

Focus Key task

5. 6.

Nature activity Participants

7.

Offer

Concept

Transactional

Development

Consumer orientation, Marketing concept Stimulating and conversional marketing Product-market fit Product innovations and communications of Commercial Corporate enterprises, Sellers Products

Society orientation, societal concept Catalytic and transformation agent Social change Social innovations and communications Socio-cultural, economic

Government, voluntary agencies, corporate enterprises, benefactors and Development,

Rural marketing services 8. 9. 10.

Target group Communicatio n Goal

11. 12.

Time-Frame Motivation

Buyers Functional Profits, Customer satisfaction Brand image Short-medium Profit-motive Business policy

projects/schemes/progra ms Beneficiaries and buyers Developmental Market development Corporate Image Medium-Long Service-motive Ideological or policy

Public

Model: The model of rural marketing represents a combination of the transactional and developmental approaches. Rural marketing process is both a catalyst as well as 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. It becomes in this process both benefactor and beneficiary. Innovation is the essence of marketing. Innovative methods of social change for successful transformation of traditional society are virtual. Such a change narrows the rural-urban divide. The process of transformation can be only evolutionary and not revolutionary. The growth of the rural market can be a planned evolutionary process based on strategic instruments of change rather than constitute just short-term opportunities for commercial gains. The exposure of ruralites to a variety of marketing transactions during the change process puts them in the role of beneficiaries than of just `buyers' of modern inputs and infrastructural services. Communication is the vital element of rural marketing. It should serve to resolve social conflicts, encourage cooperation and strengthen competitive spirit during interactions between rural and urban as well as within rural areas. Another critical point for communication is the point of conversion of ruralite from an "induced beneficiary" to an "autonomous buyer".

Rural marketing

 Classification of rural consumers The rural consumers are classified into the following groups based on their economic status: The Affluent Group: They are cash rich farmers and a very few in number. They have affordability but not form a demand base large enough for marketing firms to depend on. Wheat farmers in Punjab and rice merchants of Andhra Pradesh fall in this group. The Middle Class: This is one of the largest segments for manufactured goods and is fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in this category. The Poor: This constitutes a huge segment. Purchasing power is less, but strength is more. They receive the grants from government and reap the benefits of many such schemes and may move towards the middleclass. The farmers of Bihar and Orissa fall under this category.  Roadblocks of Indian Rural Market There are several roadblocks that make it difficult to progress in the rural market. Marketers encounter a number of problems like dealing with physical distribution, logistics, proper and effective deployment of sales force and effective marketing communication when they enter rural markets. The major problems are listed below. Standard of living: The number of people below the poverty line is more in rural markets. Thus the market is also underdeveloped and marketing strategies have to be different from those used in urban marketing. Low literacy levels: The low literacy levels in rural areas leads to a problem of communication. Print media has less utility compared to the other media of communication. Low per capita income: Agriculture is the main source of income and

Rural marketing hence spending capacity depends upon the agriculture produce. Demand may not be stable or regular. Transportation and warehousing: Transportation is one of the biggest challenges in rural markets. As far as road transportation is concerned, about 50% of Indian villages are connected by roads. However, the rest of the rural markets do not even have a proper road linkage which makes physical distribution a tough task. Many villages are located in hilly terrains that make it difficult to connect them through roads. Most marketers use Tractors or bullock carts in rural areas to distribute their products. Warehousing is another major problem in rural areas, as there is hardly any organized agency to look after the storage issue. The services rendered by central warehousing corporation and state warehousing corporations are limited only to urban and suburban areas. Ineffective distribution channels: The distribution chain is not very well organized and requires a large number of intermediaries, which in turn increases the cost and creates administrative problems. Due to lack of proper infrastructure, manufacturers are reluctant to open outlets in these areas. They are mainly dependent on dealers, who are not easily available for rural areas. This is a challenge to the marketers. Many languages and diversity in culture: Factors like cultural congruence, different behaviour and language of the respective areas make it difficult to handle the customers. Traits among the sales force are required to match the various requirements of these specific areas. Lack of communication system: Quick communication is the need of the hour for smooth conduct of business, but it continues to be a far cry in rural areas due to lack of communication facilities like telegraph and telecommunication systems etc. The literacy rate in the rural areas is rather low and consumer‘s behaviour in these areas is traditional, which may be a problem for effective communication. Spurious brands: Cost is an important factor that determines purchasing decision in rural areas. A lot of spurious brands or look-alikes are available,

Rural marketing providing a low cost option to the rural customer. Many a time the rural customer may not be aware of the difference due to illiteracy. Seasonal demand: Demand may be seasonal due to dependency on agricultural income. Harvest season might see an increase in disposable income and hence more purchasing power. Dispersed markets: Rural population is highly dispersed and requires a lot of marketing efforts in terms of distribution and communication.

Attractiveness of rural market

Large Population: The rural population is large and its growth rate is also high. Despite the rural urban migration, the rural areas continue to be the place of living majority of Indians. Rising Rural Propensity: Income Group

2000-01

Above Rs. 1.6 100,000 Rs. 77,001- 2.7 100,000

200506 3.8

200809 5.6

4.7

5.8

Rural marketing Rs. 50,001- 8.3 77,000 Rs. 25,001- 26.0 50,000 Rs.25,000 & 61.4 below

13.0

22.4

41.1

44.6

37.4

20.2

Thus we see that population between income level of Rs. 25,000- 77,000 will increase from 34.3% in 1994-95 to 67.0% in 2006-07. The rural consuming class is increasing by about 3-4% per annum, which roughly translates into 1.2 million new consumers yearly. Growth in consumption: Per capita household expenditure (in Rs.) Level

No States . Punjab Kerala Haryana High Rajasthan (Above Rs 7 Gujarat 382/-) Andhra Pradesh Maharashtra West Bengal Orissa Average Tamil Naidu 5 (Rs. 382/-) Uttar Pradesh Karnataka Assam Low (Below Rs. 3 Madhya 382/-) Pradesh

Expenditur e 614 604 546 452 416 386 384 382 381 381 373 365 338 326

Rural marketing Bihar

289

Distribution household’s income wise (projection in Rs Crore) Income groups High Middle Low Total

2001 – 02 Rural Total No. 0.26 0.0 7 12.0 7.7 4 3 5.7 5.0 9 18.0 12. 4 89

2006 – 07 Rural Total No. 0.52 0.1 2 16.7 10. 2 32 3.68 3.5 2 20.9 13. 0 96

% 26. 9 64. 2 88. 7 71. 4

Spending pattern (Rural Household‘s in Rs.) Item Food Articles

% Ric h 4 147

Poo r 73

Averag e 95

% 23. 1 61. 8 95. 7 66. 7

Rural marketing 4 2 0 1 3 1 0 4 9

Toiletries Washing Material Cosmetics Otc Products Others Total

67

33

43

43

22

28

33

17

21

13 30 333

6 15 166

9 19 215

Average rural household spends on consumables excluding food grains, milk & vegetables are Rs. 215/-.

Life style changes: Income vs. usage of packed consumer goods (% of household using)

Goods Washing Cakes/Bars shampoos Tooth Paste/Powder bathing soaps Tea (Packaged)

Life cycle advantage: Stages in life cycle

Monthly household income (Rs.) Up to 351 – 751 – 1501 350 750 1500 + 60 78 86 91 57 22

72 36

89 65

93 85

20 22

25 30

41 48

63 64

Rural marketing

Product

Urban

Popular soaps Premium soaps Washing powder Skin creams Tea

Maturity Late growth Late growth Maturity Maturity

Market Growth Rural Rate % 2 Growth 11 6 1.1 4

Early growth Early growth Growth Growth

Market growth rates higher: Growth rates of the FMCG market and the durable market are higher in rural areas for many products. The rural market share will be more than 50% for the products like toilet soaps, body talcum powder, cooking medium (oil), cooking medium (vanaspati), tea, cigarettes and hair oil. Rural marketing is not expensive: Conventional wisdom dictates that since rural consumers are dispersed, reaching them is costly. However, new research indicates that the selling in Rural India is not expensive. According to one research it costs roughly Rs.1 Crore to promote a consumer durable inside a state. This includes the expenses of advertising in vernacular newspapers, television spots, in-cinema advertising, radio, van operations and merchandising and point of purchase promotion. Campaign like this, which can reach millions, costs twice as much in urban area.

Remoteness is no longer a problem: Remoteness in a problem but not insurmountable. The rural distribution is not much developed for the reasons,Lack of proper infrastructure such as all-weather roads, electrification and sanitation, and Lack of marketer‘s imagination and initiative.

Rural marketing Marketers have so far, failed in analyzing the rural side and exploiting rural India‘s traditional selling system- Haats & Melas.Their near obsession with just duplicating the urban-type network and that too with very limited success, has kept them blind to the potential of these two outlets.

Rural Vs Urban Marketing No Aspect . 1

Philosophy

2

Market Demand Competition

Consumers Location Literacy Income Expenditure

3

Needs Innovation/Adoption Product Awareness Concept Positioning

Urban

Rural

Marketing & Societal Concepts & Relationship Marketing

Marketing Societal Concepts, Development Marketing Relationship Marketing

&

&

High Low Among Units In Mostly From Organized Sector Unorganized Units Concentrated High High Planned, Even High Level Faster

Widely Spread Low Low Seasonal, Variation Low Level Slow

High Known Easy

Low Less Known Difficult

Rural marketing

4

5

Usage Method Quality Preference Price Sensitive level desired distribution

channels

6

Transport Facilities Product Availability Promotion Advertising

Personal Selling Sales Promotion Publicity

Easily Grasped Good

Difficult To Grasp Moderate

Yes Medium-high

Very much Medium-low

Wholesalers, stockists, retailer, supermarket, specialty stores, & authorised showrooms Good High

Village ―Haats‖

Print, audio visual media, outdoors, exhibitions etc. few languages Door-to-door, frequently Contests, gifts, price discount Good opportunities

TV, radio, print media to some extent. More languages Occasionally

shops,

Average Limited

Gifts, price discounts Less opportunities

 Special Products for Rural Markets: Rural Transporter: Mahindra & Mahindra is busy developing the prototype of what it calls a ‗Rural Transporter‘ – basically a hybrid between a tractor

Rural marketing and a rural transport vehicle. The product at 20-25 HP will be targeted at those who cannot afford a normal tractor and would also fulfill the need of family transporter that could take in the rural roughs but would be much more comfortable and safer than the conventional tractor-trolley. Sampoorna TV: LG Electronics, the Korean firm has rejigged the TV to appeal to local needs. It spent Rs. 21 Lacs to develop a set that would have on-screen displays in the vernacular languages of Hindi, Tamil and Bengali. The logic, rural consumers unfamiliar with English would still be able to use the TV without being intimidated. Titan Watches: A recent NCAER study revealed that there is a great potential for watches in rural areas. In fact it is considered to be a high priority list. It was also found that a rural consumer looks for the ruggedness of the watch more than the urban consumer does. He prefers thick watches than slim watches. The biggest problem that the Marketers are facing in the Rural Markets is Of IMITATIONS. Imitations may result in two types of goods depending upon the purpose, commitment, and competence of imitator. A poor imitator will end up in producing deceptive, spurious, fake, copycat products. He dupes the gullible customer by offering products having close resemblance with the original. In quality, it is poor cousin to the original. On the other hand, a poor imitator may even produce an improved version of the original product. In this scenario the job of the Marketer becomes even more difficult insense that he has not to fight other competitors but also the imitated products. The advantages that these products enjoy in the rural markets are that the Imitators who are in the villages are making these and they are offering More Margins & Better credit Facilities. To solve this problem the Marketer has to educate the consumer about his product and show him the benefits of his products over the imitated ones

Rural marketing

Need-Product Relationships and the changes happening in Rural India Needs

Old Products

New Products

Brushing Teeth

Neem sticks, Charcoal, Rocksalt, Husk Coconut fiber, Earthy materials, Brick Powder, Ash Bullock Cart, Horses, Donkeys

Toothpaste, tooth powder Washing Powders, soaps and liquids

Washing Vessels

Transport

Irrigation

Hair Wash

Tractors, LCVs, Mopeds, Scooters, Motor cycles Wells, Canals, Water Bore-wells, Motors, lifters, Wind Mills Power Generators, Pump Sets Shikakai powder, Shampoos and hair Retha, Besan care soaps

 CONSUMER BEHAVIOR IN RURAL MARKETS: Promotion of brands in rural markets requires the special measures. Due to the social and backward condition the personal selling efforts have a challenging role to play in this regard. The word of mouth is an important message carrier in rural areas. Infect the opinion leaders are the most influencing part of promotion strategy of rural promotion efforts. The experience of agricultural input industry can act as a guideline for the marketing efforts of consumer durable and non-durable companies.

Rural marketing Relevance of Mass Media is also a very important factor. The Indian established Industries have the advantages, which MNC don't enjoy in this regard. The strong Indian brands have strong brand equity, consumer demand-pull and efficient and dedicated dealer network which have been created over a period of time. The rural market has a grip of strong country shops, which affect the sale of various products in rural market. The companies are trying to trigger growth in rural areas. They are identifying the fact that rural people are now in the better position with disposable income. The low rate finance availability has also increased the affordability of purchasing the costly products by the rural people. Marketer should understand the price sensitivity of a consumer in a rural area. This paper is therefore an attempt to promote the brand image in the rural market. Indian Marketers on rural marketing have two understanding (I) The urban metro products and marketing products can be implemented in rural markets with some or no change. (ii) The rural marketing required the separate skills and techniques from its urban counter part. The Marketers have following facilities to make them believe in accepting the truth that rural markets are different in so many terms. (i)The rural market has the opportunity for. (ii) Low priced products can be more successful in rural markets because the low purchasing powers in rural markets. (iii) Rural consumers have mostly homogeneous group with similar needs, economic conditions andproblems. (iv) The rural markets can be worked with the different media environment as opposed to press, film, radio and other urban centric media exposure. How does reality affects the planning of marketers? Do villagers have same attitude like urban consumers? The question arises for the management of rural marketing effects in a significant manner so than companies can enter in the rural market with the definite goals and targets but not for a short term period but for longer duration. The Research paper will discuss the

Rural marketing role of regard. The strategy, which will be presented in the paper, can be either specific or universally applicable. The ultimate objective of all production is consumption. A free market economy provides freedom to the consumers to buy and consume goods of their choice. The buying preferences of consumers send signals to producers to produce various commodities in required quantities. Producers, therefore, produces only those commodities which are desired by the consumers. In India, consumer behavior has changed in recent years owing to enhanced awareness, information technology, and, more importantly, governmental intervention through legislations. India's rural consumers account for about 73 percent of the total consumers. In recent years, the lifestyle of a large number of rural consumers in India has changed dramatically and continues to do so. The buying behavior of the rural consumers is influenced by several factors, such as socio-economic conditions, cultural environment, literacy level, occupation, geographical location, efforts on the part of sellers, exposure to the media, etc. This book examines the buying behavior of India's rural masses and the diverse factors which influence their choices. The work is useful for understanding the Indian rural consumer psyche in order to formulate an appropriate marketing strategy. It includes:  Media  Newspaper brand  Sources of information.

RURAL CONSUMER PREFERENCES: In order to assess the buyer behavior towards certain critical aspects of marketing, the preferences of the consumers is directly related to: Price Quality Credit Variety

Rural marketing Dealer advice Specific brand.

PURCHASE BEHAVIOR: Rural people can buy only from three places includes:  From the shop in the same village  Weekly bazaar  From the shop of nearby town. Factors influencing buying behavior The various factors that affect buying behavior of in rural India are: Environmental of the consumer - The environment or the surroundings, within which the consumer lives, has a very strong influence on the buyer behavior, egs. Electrification, water supply affects demand for durables. Geographic influences - The geographic location in which the rural consumer is located also speaks about the thought process of the Consumer. For instance, villages in South India accept technology quicker than in other parts of India. Thus, HMT sells more winding watches in the north while they sell more quartz watches down south. Family – it is an important buying decision making organization in consumer markets. Family size & the roles played by family members exercise considerable influence on the purchase decisions. Industry observers are increasingly realizing that at times, purchase of durable has less to do with income, but has more to do with the size of the family & that‘s where rural India with joint family structures, becomes an attractive proposition. Economic factors – The quantum of income & the earning stream are one of the major deciding factors, which determine to a great extent, what the customer will be able to buy. Many people in the rural market are below poverty line & for large number of people, agriculture is the primary

Rural marketing occupation. More than 70% of the people are in small-scale agricultural operation. These factors affect the purchase decision. Place of purchase - (60% prefer HAATS due to better quality, variety & price) Companies need to assess the influence of retailers on both consumers at village shops and at haats. Creative use of product - ex Godrej hair dye being used as a paint to colour horns of oxen, Washing machine being used for churning lassi. The study of product end provides indicators to the company on the need for education and also for new product ideas. Brand preference and loyalty - (80% of sale is branded items in 16 product categories)  Cultural factors influencing consumer behavior Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyer‘s culture. Culture is the most basic element that shapes a person‘s wants and behavior. In India, there are so many different cultures, which only goes on to make the marketer‘s job tougher. Some of the few cultural factors that influence buyer behavior are: Product (colour, size, design, and shape): There are many examples that support this point. For example, the Tata Sumo, which was launched in rural India in a white colour, was not well accepted. But however, when the same Sumo was relaunched as Spacio (a different name) and in a bright yellow colour, with a larger seating capacity and ability to transport good, the acceptance was higher. Another good example would be Philips audio systems. Urban India looks at technology with the viewpoint of ‗the smaller the better‘. However, in rural India, the viewpoint is totally opposite. That is the main reason for the large acceptance of big audio systems. Thus Philips makes audio systems, which are big in size and get accepted in rural India by their sheer size. Social practices: There are so many different cultures, and each culture

Rural marketing exhibits different social practices. For example, in a few villages they have common bath areas. Villagers used to buy one Lifebuoy cake and cut it into smaller bars. This helped lifebuoy to introduce smaller 75-gram soap bars, which could be used individually. Decision-making by male head: The male in Indian culture has always been given the designation of key decision maker. For example, the Mukhiya‘s opinion (Head of the village), in most cases, is shared with the rest of the village. Even in a house the male head is the final decision maker. In rural areas, this trend is very prominent.

Changes in saving and investment patterns: From gold, land, to tractors, VCR‘s, LCV‘s  4 A’s approach of Indian Rural Market The rural market may be appealing but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media. However, the rural consumer is not unlike his urban counterpart in many ways. The more daring MNC‘s are meeting the consequent challenges of availability, affordability, acceptability and awareness (the so-called 4 A‘s)  Availability The first challenge is to ensure availability of the product or service. India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than 5,000.

Rural marketing Marketers must trade off the distribution cost with incremental market saturation. Over the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system which helps its brands reach the interiors of the rural market. To service remote village, stockiest use auto rickshaws, bullockcarts and even boats in the backwaters of Kerala. 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 who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote area offices.  Affordability The second 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. Some companies have addressed the affordability problem by introducing small unit packs. Most of the shampoos are available in smaller packs. Fair and lovely was launched in a smaller pack. Colgate toothpaste launched its smaller packs to cater to the travelling segment and the rural consumers.Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh — the so-called `Bimaru' States. Hindustan Lever, among the first MNC‘s to realize the potential of India's rural market, has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has paid off: Eighty per cent of new drinkers now come from the rural markets. CocaCola has also introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and multi serve sachet of 200 gm priced at Rs 15.

Rural marketing

 Acceptability The third challenge is to gain acceptability for the product or service. Therefore, there is a need to offer products that suit the rural market. One company which has reaped rich dividends by doing so is LG Electronics. In 1998, it developed a customized TV for the rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the very first year. Because of the lack of electricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice boxes — a tin box for new outlets and thermocol box for seasonal outlets. The insurance companies that have tailor-made products for the rural market have performed well. HDFC Standard LIFE topped private insurers by selling policies worth Rs 3.5 crores in total premium. The company tied up with non-governmental organizations and offered reasonably-priced policies in the nature of group insurance covers. With large parts of rural India inaccessible to conventional advertising media — only 41 per cent rural households have access to TV — building awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer — movies and music — and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former 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 luxury.  Awareness Brand awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer — movies and music — and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former 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. Hindustan Lever relies heavily on its own company-organized

Rural marketing 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 53.6 per cent of rural households. It doubled it‘s spend on advertising on Doordarshan, which alone reached 41 per cent of 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. Philips India uses wall writing and radio advertising to drive its growth in rural areas. The key dilemma for MNC‘s ready to tap the large and fastgrowing rural market is whether they can do so without hurting the company's profit margins.  Evolving a New Marketing Mix for Selling to Rural Indians The marketing mix in the case of Indian rural markets consists of 4P‘s i.e. Product, Price, Promotion, Place combined with 1 P that is Packaging and one R i.e. Retailer as special focus areas. However, at the base of this marketing mix will be 2 E‘s of Education and Empowerment.

Rural marketing

CUSTOMIZATI ONN

EMPOWEREME NT The hypothesis tends to ignore the requirement of a developing country‘s rural needs. The concept of marketing has to be taken in conjunction with economic, psychological and social implications. Hence, the concept of Mega-Marketing where all such factors are taken into consideration while developing the Marketing Mix is more relevant to succeed and build enduring brands. In rural India‘s case the two most important considerations are Education and Empowerment opportunities which traditional approaches of marketing fail to acknowledge. Then only the opportunity provided by the rural market can be fully tapped. 12.2% of the world lives in Rural India. Put in a different context, this works out to 1 in 8 people on Earth. Being able to successfully tap this growing market is every marketer‘s dream. However, myths abound. India‘s rural markets are often misunderstood. A clear distinction needs to be made with regard to the reality versus the image of rural India. If such a distinction is not made, we will be unable to distinguish between the serpent and the rope and the rope and the serpent. The rural market is not homogeneous. Though the aggregate size is very large, individual subsets of this market tend to be rather small and EDUCATI ON marketing traditional

Rural marketing disparate. Geographical, demographical, statistical, logistical differences are very apparent. Positioning and realities regarding the potential of each of these market segments differ and lie at the very core of forming the strategy for the rural markets. The face of Indian agriculture is changing from dry land and irrigated agriculture into high-tech and low-tech agriculture. Farmers in states like Maharashtra and Andhra Pradesh have reaped the benefits of adopting new age farming practices, including green house cultivation, fert-irrigation and hydroponics. This has radically changed the economics of farming, with the investment in these systems lowering the cost of cultivation, increasing yields due to integrated crop management practices and reducing the dependence on rainfall. As a result, disposable income has grown sharply. The aspirants are becoming climbers showing a sustained economic upturn as purchasing power is increasing in the rural markets. The proportion of very rich has increased five- fold. The growing incomes have modified demand patterns and buyer behaviour. Moreover, the need for a product or service is now adequately backed up with the capacity, ability and willingness to pay. However, the market still remains largely unexploited. At most times, potential markets need to be found and at times, even created. Such creation of demand needs efficient management of the supply chain. To increase market share, behavioural change needs to be at the forefront of any strategy. Further, due to the diversity of this market, marketers need to think, plan and act locally. It is therefore essential to develop an accurate Marketing Mix for selling to rural Indians. Product ―Authentic marketing is the art of identifying and understanding customer needs and creating solutions that deliver satisfaction to the customers, profits to the producers and benefits for the stakeholders.‖ ................... Philip Kotler The product offerings have to be not only customized but also at a different plane altogether in case of rural markets. The various product levels as

Rural marketing outlined by Philips Kotler, namely Core Benefit, Basic Product, Expected product, augmented product and Potential Product should be adequately taken into consideration and the product offerings should be henceforth customized according to the needs. The Rural market is not a homogenous set of customers with preferences frozen in time. When developing products in any category, marketers must identify the typical rural specific needs. Urban products cannot be dumped onto rural markets without modifications. Tailor-made products are better received by the rural audience as the consumers feel empowered and tend to dentify with the offering. Most of the times in the urban market the product is offered at the augmented product level where the objective of the product offering is to exceed the customer expectation. But in the rural markets of India which have been till date characterized by the absence of the choice, substandard products and cheap clones of their urban counterparts; the immediate level to be operated is the Expected product where his expectations are met. Also, due to the low level of incomes and literacy levels, it is imperative that the basic needs of the consumer are met.

Rural marketing

CORE BENEFIT BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT

For instance, shampoos or soaps with distinctive, strong rose or jasmine perfumes are very popular with the rural women in South India. The urban women do not identify as strongly with these perfumes. Sachetization is also a distinctly rural-driven phenomenon. As demand in several categories is being created, intensity of use is quite low. On average, rural folk would use a shampoo only once a week. Habits take time to change and making unit sachet packs affordable is the key to inducing trial and purchase. Systematic, in-depth research that can help understand the depths of the mind of the villagers, their buying criteria, purchase patterns and purchasing power are an essential input while developing rural specific products or services. A common error has been to launch a completely stripped down version of the urban product in the rural market, with the objective of offering the lowest possible price. This is not what a rural consumer wants. What is required is to introduce a product with ‗essential‘ features, whose needs are recognized and for which the consumer is willing to pay (valueadding features). Product developers should aim at eliminating all the cost-

Rural marketing adding features, i.e., features which a consumer is unwilling to pay for as he sees no obvious utility. This would ―redefine value‖ in the minds of the consumer and tremendously increase product acceptability. Product development is severely constrained by legislation in the case of agricultural inputs like fertilizers, insecticides and pesticides. In the case of fertilizers for instance, though levels of deficiency of nutrients have increased significantly over the past decade, no significant changes in formulations notified under the Fertilizer Control Order have taken place. This has severely restricted the availability of cost effective specialty fertilizers of global standards to Indian farmers. Technological know-how for manufacture of such fertilizers exists within the country. However, farmers using modern farming practices are unable to get an assured supply of such farm inputs due to draconian legislation. A move to liberalize the sector could perhaps consider the accepted worldwide norm of allowing manufacturers with a strong R&D base to decide their own formulations with the government machinery conducting checks on market samples of finished products to ensure that they live up to the labelled specifications. This would be a major policy initiative that would give a huge impetus to innovative product development in the farm sector. Product life cycles as are becoming shorter and these are having their impact on company life cycles. Thus for any company wishing to develop its product portfolio, allegiance to the classic American P-A-L Principle of Partnership - Alliances - Linkages is a basis for survival. Pricing A significant portion of the rural population is paid in daily wages. Daily wage earners tend to have little stock of money, and therefore tend to make purchases only to meet their daily needs. The implication is that pack sizes 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 manufacturer is not only competing with other manufacturers in its category, but also other products that consumers may consider one-off luxury purchases such as shampoo. So marketer will have

Rural marketing to examine method by which he can make the product more affordable. In the case of consumer durable one way is to work through rural bank and offer higher purchase terms to consumer. In short, the Value for money is the most important concept that will differentiate the successful brand from the re

STATUS CONSUMERS BRAND NAME

SEEKING

BUDGET CONSCIOUS CONSUMER

BUDGET

MODEL

TECHNOLOGY

IMAGE

BUDGET

WARRANTY

AFTER SALES BRAND NAME MODEL

Every marketer must realize that the rural consumer is not a miser. He is not simply looking for the cheapest product in every category. He understands and demands value for money in every purchase that he

Rural marketing makes. Pricing therefore is a direct function of factors including cost-benefit advantage and opportunity cost. Pricing offered to consumers should be for value offerings that are affordable. Price sensitivity is extremely high and comparison with competitive prices is common. Consumers seem to create narrow psychological price bands in their minds for product groups and price elasticity beyond the extreme price points are very high. The perceived utility or value of the product or service is the ultimate decision making factor. It is certain however, that buying cheap is not the primary objective. Rather, it is ―buying smart‖. A study revealed that the average rural consumer takes approximately 2 years to decide on buying a watch! He will not do so unless he is totally convinced that he is getting value for Money. Impulse buys and purchases for conspicuous consumption are also extremely few and far Between considering the ―value for money‖ factor that reigns supreme in most rural purchase decisions. It must be remembered that the rural consumer does not have a budget problem. He has a cash flow problem. This is because the village folk receive funds only twice a year. At these times, he is capable of making high volume purchases. At all times, however, the unit price is critical and so is the pack size. Because of this, in the lean season when there is a cash flow crunch, marketers need to provide financial products, schemes or solutions that suit the needs of the rural population. Promotions & Advertising There are a lot of barriers that militate against homogenous media and message delivery. These barriers stem from the fact that rural markets vary immensely in terms of tastes, habits and preferences leading to different expectations of every segment of the population. However, one fact is certain across all areas. The rural consumer likes to touch and feel a product before making a choice. Demonstrations are undoubtedly the most effective promotional tool that shapes purchase decisions of the rural population. Demonstrations establish the credentials of any new technology used in developing the product. In today‘s information era, it is very important for companies to wise-up on emerging technologies. It has in fact become a medium to attract larger

Rural marketing audiences for a product demonstration. Technology must be used to prepare a database of customers and their requirements. The use of video using mobile vans and even large screen video walls at events should be arranged. The classic conundrums of reach and coverage of the media are shattered. Several creative communication media have been used by various companies to tackle the problem of having to use visual communication and non-verbal communication to reach the rural audience. This is required because a large proportion of the rural population cannot read or write. Alliances with cottage industries, dharmsalas, panchayats, post offices and police stations for advertising have also helped immensely. More importantly, in rural India, experience has proved time and time again that word of mouth is the key influencer. Intermediaries are the foundation to rural distribution. If the intermediary understands and is constantly reminded about your product, then the end user will not be allowed to forget. The companies must reinforce this highly effective medium and use all their innovation and money tom develop more dramatic point of sale and point of contact material. This becomes all the more important when in rural India, more often than not, the overlap between the product categories sold in a single outlet in tremendous. For instance, a store may call itself as a grocery store but will stock everything from groceries to vegetables to fertilizers and may at times even stock medicines. In such cases, the point at which the customer actually comes in contact with a product may not be the point at which the sale is affected. The re-use capacity and colour of the container in which the product is packed is also a crucial factor. In fact, reusable packaging is considered a major aid in promoting sales for products in the rural market. Consumer and Trade schemes that Incentivise Spending using discount coupons, off season discounts, free samples, etc. encourage spending. Lucky draws and gift schemes are a major hit in most states. The use of local idioms and colloquial expressions are an excellent way to strike a rapport with the rural consumer and must be borne in mind when developing media plans and public relations programmes. No high voltage publicity is required. The rural consumer is very down to earth but

Rural marketing equally discerning and marketers need to step into the shoes of the rural folk while creating product promotion campaigns. Another unique feature of rural markets is that the Decision making process is collective. The persons involved in the purchase process - influencer, decider, buyer, one who pays can all be different. So marketers must address brand messages in their campaigns at several levels. Apart from regular household goods, several agribusiness companies have also started providing gift schemes with offers for free jewellery that influences the ladies to pressure the farmers to purchase agricultural inputs from select companies. This promotion strategy thus makes women influence purchase decisions that they would ordinarily not be involved in. Youth power is becoming increasingly evident in villages. Rural youth bring brand knowledge to the households. This has forced several companies to change the focus and positioning of their products and services towards this segment that is growing in absolute number and relative influence. There are other attributes in the promotion strategy which are explained as under: 1. Mass media: In the present world mass media is a powerful medium of communication. The following are the mass media generally used: Television. Cinema. Radio. Print media: Handbills and Booklets, posters, stickers, banners, etc. 2. Personal selling and opinion leaders: In personal selling it is required that the potential users are identified and awareness is created among them about the product, its features, uses and benefits. This can be achieved only by personal selling by highly motivated sales person. In fact the word of mouth information holds lot validity in rural areas even today. This is the reason why opinion leaders and word of mouth are thriving among rural consumers. An opinion leader in rural areas can be defined as a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. The opinion leaders may be big landlords or politicians or progressive farmers.

Rural marketing

3. Special campaigns: During crop harvest and marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractor owners (tonee) conducted by MRF Limited is one such example. Brooks Bond carries out marches in rural areas with band, music and caparisoned elephants to promote their brand of tea. Mandi and Mela magic At last count, India witnessed over 50,000 melas. Of these 25,000 meals are held to signify religious, cultural festivals as well as local fairs and events. On an average, visitors at these melas spend between Rs. 5,000 to Rs. 50,000 a day. For example, 3 lakh people visited the annual mela at Navchadi which lasts for 7 days in Meerut. The largest such mela is the Maha Kumbh Mela which is visited by an average of 12 crore people. There is however, a caveat when an organization is considering using mela for marketing their products. Is the audience at this mela fit for promotion of the product at hand? What are the psychographics of this audience? What is the motivational and behavioural impetus that brings visitors to each of these melas. On considering these questions, it has been observed that melas are fit to generate product exposure, package familiarity, brand reminder and word of mouth. However, for products that need concept marketing and those that have high prices, such melas are not suitable promotion media. This is because the time and the mood of the people that visit these melas are not right to digest technical information or for making large purchases. People come to melas to have a good time and are not reminded of such high technology or high priced products when they return home. In the words of Mr. Neville Gomes, Managing Director of Multimedia Aquarius, promotion at melas is like a ―one night stand‖. There will be no reminder later. Thus, a large amount of qualitative judgment is indeed in planning promotions at melas by media planners. Place place is the major reason behind the evolution of rural marketing as a distinct discipline. A village as a place for promotion, distribution &

Rural marketing consumption is very different from a town or city, thus the general marketing theories can‘t be applied directly in rural markets. Reaching the right place is the toughest part in today‘s rural marketing, as most of the products reach up to the nearest townships of any village, but due to higher distribution costs, these products fails to reach the village as the distribution channel fails to put in the required efforts. Most of the times, the rural retailers themselves go to the urban areas to procure these goods. Rural markets imply complex logistical challenges that show up as high distribution costs.

Significance of Distribution No matter how well devised a company‘s product, pricing or promotion strategy, the most crucial link in ensuring the success of rural marketing efforts is distribution. Distribution must be strengthened and this would raise investment cost barriers for new entrants. In Rural India, the selection and use of distribution channels is a nightmare. The reason for this is very clear when we consider that on an average, Urban and Rural India both have approximately 3 million retail outlets. However, Urban India has only 4,000 towns where these outlets are located. On the other hand, Rural India‘s 3 million outlets are located in 6.3 lakh villages. Thus, marketers are faced with the problem of feeding 3 million shops located in vastly diverse areas each of which records an average sale of only Rs.5,000 per outlet. Further compounding this problem is the fact that even this meagre sale is mostly on credit. The diversity in the distribution of shops is the self-limiting factor in terms of servicing the rural distribution network.

direct contact with the final consumer. The dealers' feedback needs to be obtained as the direction for future strategy emanates here.

Rural marketing SEGMENTATION OF RURAL MARKET The first step is to develop & implement any strategy for the rural market should include the appropriate segmentation of the rural market. The important thing is that appropriate segmentation basis need to be applied. Different product categories have different rural markets to cater to & these can be selected by applying different criteria of segmentation. The organization can do the following thing to start with: Focus on select markets. Focus on select villages. BY COMMUNICATING AND CHANGING QUALITY PERCEPTION Companies are coming up with new technology and they are properly communicating it to the customer. There is a trade of between Quality a customer perceives and a company wants to communicate. Thus, this positioning of technology is very crucial. The perception of the Indian about the desired product is changing. Now they know the difference between the products and the utilities derived out of it. As a rural Indian customer always wanted value for money with the changed perception, one can notice difference in current market scenario.

BY PROPER COMMUNICATION IN INDIAN LANGUAGE The companies have realized the importance of proper communication in local language for promoting their products. They have started selling the concept of quality with proper communication. Their main focus is to change the Indian customer outlook about quality. With their promotion, rural customer started asking for value for money. BY TARGET CHANGING PERCEPTION If one go to villages they will see that villagers using Toothpaste, even when they can use Neem or Babool sticks or Gudakhu, villagers are using soaps like Nima rose, Breeze, Cinthol etc. even when they can use locally manufactured very low priced soaps. Villagers are constantly looking forward for new branded products. What can one infer from these incidents, is the paradigm changing and customer no longer price sensitive? Indian

Rural marketing customer was never price sensitive, but they want value for money. They are ready to pay premium for the product if the product is offering some extra utility for the premium. BY UNDERSTANDING CULTURAL AND SOCIAL VALUES Companies have recognized that social and cultural values have a very strong hold on the people. Cultural values play major role in deciding what to buy. Moreover, rural people are emotional and sensitive. Thus, to promote their brands, they are exploiting social and cultural values. BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. They do not see any value in frills associated with the products. They aim for the basic functionality. However, if the seller provides frills free of cost they are happy with that. They are happy with such a high technology that can fulfil their need. As "Motorola" has launched, seven models of Cellular Phones of high technology but none took off. On the other hand, "Nokia" has launched a simple product, which has captured the market. BY PROMOTING PRODUCTS WITH INDIAN MODELS AND ACTORS Companies are picking up Indian models, actors for advertisements as this helps them to show themselves as an Indian company. Diana Hyden and Shahrukh Khan are chosen as a brand ambassador for MNC quartz clock maker "OMEGA" even though when they have models like Cindy Crawford. BY ASSOCIATING THEMSELVES WITH INDIA MNCs are associating themselves with India by talking about India, by explicitly saying that they are Indian. M-TV during Independence Day and Republic daytime make their logo with Indian tri-colour. Nokia has designed a new cellular phone 5110, with the India tri-colour and a ringing tone of "Sare Jahan se achcha".

Rural marketing BY PROMOTING INDIAN SPORTS TEAM Companies are promoting Indian sports teams so that they can associate themselves with India. With this, they influence Indian mindset. LG has launched a campaign "LG ki Dua, all the best". ITC is promoting Indian cricket team for years; during world cup they have launched a campaign "Jeeta hai jitega apna Hindustan India India India". Similarly, Whirlpool has also launched a campaign during world cup. BY TALKING ABOUT A NORMAL INDIAN Companies are now talking about normal India. It is a normal tendency of an Indian to try to associate him/her with the product. If he/she can visualize himself/herself with the product, he /she become loyal to it. That is why companies like Daewoo based their advertisements on a normal Indian family. BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-specific products. Keeping into consideration the requirements, a firm develops these products. Electrolux is working on a made-for India fridge designed to serve basic purposes: chill drinking water, keep cooked food fresh, and to withstand long power cuts.

BY GIVING INDIAN WORDS FOR BRANDS Companies use Indian words for brands. Like LG has used India brand name "Sampoorna" for its newly launched TV. The word is a part of the Bengali, Hindi, Marathi and Tamil tongue. In the past one year, LG has sold one lakh 20-inch Sampoorna TVs, all in towns with a population of around 10,000. BY ACQUIRING INDIAN BRANDS As Indian brands are operating in India for a long time and they enjoy a good reputation in India. MNCs have found that it is much easier for

Rural marketing them to operate in India if they acquire an Established Indian Brand. Electrolux has acquired two Indian brands Kelvinator and Allwyn this has gave them the well-established distribution channel. As well as trust of people, as people believe these brands. Similarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands. BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. They can either go for the traditional media or the modern media. The traditional media include melas, puppetry, folk theatre etc. while the modern media includes TV, radio, and e-chaupal. LIC uses puppets to educate rural masses about its insurance policies. Govt of India uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipton India ltd used magicians electively for launch of Kadak Chap Tea in Etawah district. In between such a show, the lights are switched of and a torch is flashed in the dark (EVEREADYs tact).

BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies. The distribution channel could be big scale Super markets; they thought that a similar system can be grown in India. However, they were wrong; soon they realized that to succeed in India they have to reach the nook and the corner of the country. They have to reach the "local Paan wala, Local Baniya" only they can succeed. MNC shoe giants, Adidas, Reebok, and Nike started with exclusive stores but soon they realized that they do not enjoy much Brand Equity in India, and to capture the market share in India they have to go the local market shoe sellers. They have to reach to local cities with low priced products. BY ASSOCIATING THEMSELVES WITH INDIAN CELEBRITIES

Rural marketing MNCs have realized that in India celebrities enjoyed a great popularity so they now associate themselves with Indian celebrities. Recently Luxor Writing Instruments Ltd. a JV of Gillette and Luxor has launched 500 "Gajgamini" ranges of Parker Sonnet Hussain special edition fountain pens, priced at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a renowned painter who has created "Gajgamini" range of paintings. Companies are promoting players like Bhaichung Bhutia, who is promoted by Reebok, so that they can associate their name with players like him and get popularity. MELAS Melas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI (Gripe water). NCAER estimates that around half of items sold in these melas are FMCG products and consumer durables. Escorts also display its products like tractors and motorcycles in such melas.

PAINTINGS A picture is worth thousand words. The message is simple and clean. Rural people like the sight of bright colors. COKE, PEPSI and TATA traders advertise their products through paintings.

 Product Strategies The specific strategies, which can be employed to develop or modify the products to targets the rural market, can be classified as follows: 1. Small unit packing: Given the low per capita income & purchasing habits of the rural consumers, small unit packages stand a good chance of acceptance in rural market. Single serve packets or sachets are enormously popular in India. They allow consumers to buy only what they need, experiment with new products, & conserve cash at the same time.

Rural marketing This method has been tested by products life shampoos, pickles, biscuits, Vicks cough drops in single tablets, tooth paste, etc. Small packing stands a good chance of acceptance in rural markets. The advantage is that the price is low and the rural consumer can easily afford it. Also the Red Label Rs. 3.00 pack has more sales as compared to the large pack. This is because it is very affordable for the lower income group with the deepest market reach making easy access to the end user satisfying him. The small unit packing will definitely attract a large number of rural consumers. 2. New product designs: Keeping in view the rural life style the manufacturer and the marketing men can think in terms of new product designs. The rural product usage environment is tough because of rough handling, rough roads & frequent power fluctuations. Thus, all these environmental factors must be considered while developing the products meant for rural audience. Nokia‘s 1100 model is a very good example of a customized model for rural markets. Its design has been modified to protect it against rough usage in rural environment; it is dust resistant & has a small torch light in view of the frequent power cuts in rural India. It is also introduces messaging in Hindi language now, in some of the economically priced models in order to cater to the semi-urban or rural consumers. This is in real terms, thinking global & acting local. 3. Sturdy products: Sturdiness of a product is an important factor for rural consumers. The product should be sturdy enough to stand rough handling, transportation & storage. The experience of torch light dry battery cell manufacturers supports this because the rural consumers preferred dry battery cells which are heavier than the lighter ones. For them, heavier weight meant that it has more over and durability. Sturdiness of a product either or appearance is an important for the rural consumers. 4. Utility oriented products: The rural consumers are more concerned with utility of the product and its appearance Philips India Ltd. Developed and introduced a low cost medium wave receiver named BAHADUR during the early seventies. Initially the sales were good but declined subsequently. On

Rural marketing investigation it was found that the rural consumer bought radios not only for information and news but also for entertainment. 5. Brand name: For identification, the rural consumers do give their own brand name on the name of an item. The fertilizers companies normally use a logo on the fertilizer bags though fertilizers have to be sold only on generic names. A brand name or a logo is very important for a rural consumer for it can be easily remembered. Many a time‘s rural consumers ask for peeli tikki in case of conventional and detergent washing soap. Nirma made a peeli tikki especially for those peeli tikki users who might have experienced better cleanliness with the yellow colored bar as compared to the blue one although the actual difference is only of the color. e.g.: Coca-Cola targeted the whole Indian rural market with the positioning of ―Thanda Matlab Coca-Cola‖ advertisements because most of the villagers say when wanting a drink refer to it as Thanda…… so Coca-cola used that word.

 Pricing strategies 1. Low cost/ cheap products: This follows from the product strategy. The price can be kept low by low unit packaging‘s like paisa pack of tea, shampoo sachets, vicks 5 grams tin, etc. this is a common strategy widely adopted by many manufacturing and marketing concerns. 2. Refill packs / Reusable packaging: In urban areas most of the health drinks are available. The containers can be put to multipurpose uses. Such measures can a significant impact in the rural market. For example, the rural people can efficiently reuse the plastic bottle of hair oil. Similarly the packages of edible oil, tea, coffee, ghee etc can be reused. Pet jars free with the Hasmukhrai and Co Tea, Ariel Super Compact. 3. Application of value engineering: in food industry, Soya protein is being

Rural marketing used instead of milk protein. Milk protein is expensive while Soya protein is cheaper, but the nutrition content of both is the same. The basic aim is to reduce the value of the product, so that a larger segment can afford it, thus, expanding the market. 4. Large volume-low margins (Rapid or slow penetration strategy): Marketers have to focus on generating large volumes & not big profit margins on individual products. If they price their product at a level which can lead to good volumes, then they can still generate good returns on the capital employed. 5. Overall efficiency & passing on benefits to consumers: For rural products, the strategy should be to cut down the production, distribution & advertising costs & passing on these benefits to the customers to further increase the turnover. Most often, it has been observed that advertising has less to do with product sales in the rural areas. If an organization gets the price point right, then it can work in rural market. 6. Low volume-low price strategy: This strategy of reducing prices by reducing the package size in order to make it appear more affordable, is delivering very good results for a large number of FMCG product categories, in the rural markets of India. In categories where maintaining the price point is extremely critical, this strategy is delivering very good results. 7. Ensuring price compliance: Rural retailers, most of the times, charges more than the MRP. The manufacture has to ensure price compliance either through promotional campaigns, as was done by Coca Cola, or by ensuring the availability of products at the retail outlets directly.

 Promotion strategies Customized promotional media & messages need to be developed by the organizations to effectively target the rural market. The following strategies can be considered while developing promotional campaigns for the rural

Rural marketing markets: Think Global Act Local Rural population is diverse, but the commonalities of their ethos & simple living habits need to be understood for advertising to succeed. For that, the theme of the advertisement needs to revolve among universal themes, such as family-love. But the context, storyline, language & idioms should be such that the rural audience of different rural market segments can relate to. Think in Local Idiom This is the need of the advertising professionals who can think like the rural people. The only we can have insights like ‗Thanda matlab Coca Cola‘. There should be the use of language writers who understands the rural & regional pulse better. Simplicity & Clarity All promotional messages targeted at rural audience need to be simple & clear, which can be easily understood, & they should not include any confusing elements. It is preferable that it has only a few propositions at a time. Bombarding rural consumers with too much, in less time can easily confuse them & leave them bewildered. Promotional message should highlight only the functional values of the product & explains how those values can make the consumer‘s life even better & solve any of his problems. Narrative Story Style The promotional message can be delivered in the form of an entertaining story with a message depicting how the brand delivers ―larger good‖ to the family & society. The theme of the story line can be about how the product can solve the problems of the rural consumers. Choice of Brand Ambassador Brand Ambassador for the rural markets need to be picked carefully as urban successes might not get replicated in the rural markets. That is why Govinda in the Mirinda as boosted the sales of the drink in the rural markets. An organization might spend a lot of money in hiring a brand

Rural marketing ambassador only to find out later that it had little impact on the rural consumer.  Distribution Strategy Many companies view the rural markets as great opportunity for expanding their sales but find distribution as a major problem. Unfortunately, it is almost impossible to transplant strategies which work successfully in urban markets onto rural markets, namely, extensive retailing and sustained pull generation through mass media advertising. The road blocks to reach the rural customers are:  Lack of adequate transport facilities.  Large distances between villages.  Lack of pucca roads connecting villages to nearest townships.  Lack of proper retail outlets  Lack of mass media infrastructure. The marketers were of the opinion that the villagers would come to nearby towns and buy the products that they want. What has been found is that if we have to serve the rural consumer we will have to take our products to him through the channels that he is using and some innovative ways of getting to him.

The following distribution strategies formulated for the rural category. 1. Coverage of villages with 2000 and above population: Ideally, coverage of villages with up to 2000 and above population could be the break-even point for a distribution setup. By doing so the percentage of villages covered comes to only 10% of all the villages, but the rural population covered will be substantial, to the extent of about 40 to 45 percent. With a distribution network in about 55,000 villages, which have a population of 2000 persons & above each, one can cover about 25 crores rural consumers. This strategy is good to begin with & then subsequently, villages with lesser populations can be added.

Rural marketing 2. Segmentation: the number of villages in India is huge & it is not viable to contact & serve all villages directly. Therefore, companies or distributors can carefully examine the market potential of different villages & target the villages that can be served in a financially viable manner through an organized distribution effort. 3. Use of co-operative societies: There are over 3 lacks co-operative societies operating in rural areas for different purposes like marketing cooperatives, farmer‘s service cooperatives and other multipurpose cooperatives. These cooperatives have an arrangement for centralized procurement and distribution through their respective state level federation. Such state level federation can be motivated to procure and distribute consumables items and low value durable items to the members to the society for serving to the rural consumers. Many of the societies extend credit to the members for purchases. 4. Utilization of public distributory system: The PDS in the country is fairly well organized. The revamped PDS places more emphasis on reaching remote rural areas like the hills and tribal‘s. The purpose of PDS is to make available essential commodities like food grains, sugar, kerosene, edible oils and others to the consumers at a reasonable price. The shops that distribute these commodities are called fair price shops. These shops are run by the state civil Supplies Corporation, co-operatives as well as private entrepreneurs. Here again there is an arrangement for centralized procurement and distribution. The manufacturing and marketing men should explore effective utilization of PDS. 5. Utilization of multipurpose distribution centers by petroleum/oil companies: In order to cater to the rural areas the petroleum/oil companies have evolved a concept of multipurpose distribution centers in rural areas. In addition to petrol/diesel, lubricants, these outlets also stock consumables agricultural inputs like fertilizers, pesticides and seeds. It is estimated that there are about 450 such outlets in operation in the country. The rural consumer who has tractors, oil-engine pump sets and mopeds frequent

Rural marketing these outlets for their requirement. These outlets can be profitably utilized for selling consumables and durable items also. 6. Distribution up to feeder markets/mandi towns: Keeping in view the hierarchy of markets for the rural consumers, the feeder markets and mandi towns offer excellent scope for distribution. The rural customers visit these towns at regular intervals not only for selling the agricultural produce but also for purchasing cloth, jewelry, hardware, radios, torch cells and other durables and consumer products. From the feeder markets and mandi towns the stockiest or wholesaler can arrange for distribution to the village shops in the interior places. This distribution can be done by mopeds, cycles, bullock-carts, camelbacks etc. depending upon the township. 7. Shandies/Haaths/Jathras/Melas: These are places where the rural consumers congregate as a rule. While shandies/heaths are held a particular day every week, Jathras and melas are held once or twice a year for longer durations. They are normally timed with religious festivals. Such places attract large number of itinerant merchants. Only temporary shops come up selling goods of all kinds. It can be beneficial for companies to organize sales of their product at such places. Promotion can be taken, as there will be ready captive audience. For convincing the manufacturing and marketing man with regard to the importance of these places from rural marketing point of view a visit to such places is necessary. It is estimated that over 5,000 fairs are held in the country and the estimated attendance is about 100 million rural consumers. Biggest fair ‗Pushkar Mela‘ is estimated to attract over 10 million people. There are 50 such big rural fairs held in various parts of country, which attract urbanite also like ‗Mankanavillaku‘ in Malappara in Kerela, Kumbh Mela at Hardwar in U.P. ‗Periya Kirthigai‘ at Tiruparunkunaram in Tamil Nadu. Merits: Convenience: The entire market can be related to large departmental stores in cities, where the advantage is a one-stop shopping exercise. These outlets crop up every week, providing consumers immense choice and prices.

Rural marketing Attractive: The weekend shopping is not only convenient but also entertaining. The markets start early and will be over by lunch. Afterwards, there will be entertainment. In respect of transactions, it is an attractive place to those who want to buy second hand durables and to those who prefer barter transactions. Further the freshness of the produce, buying in bulk for, a week and the bargaining advantage attract the frugal and weeklong hard working rural folk. Availability: It is a market for everyone and for everything. Household goods, clothes, durables, jewellery, cattle, machinery, farming equipment, raw materials and a host of products are available. 8. Agricultural Input Dealers: Fertilizers should be made available to the farmers within the range of 4-5 km from their residence, as per the essential commodities act. This is why there are about 2 lakh fertilizer dealers in the country, both in cooperative & private sector. Example of Varana Nagar in Maharashtra proved an eye opener in this regard where the sugar and milk co-operatives have totally changed the life style of people. The supermarket in Varana Nagar caters exclusively to rural consumers. Similarly a co-operative supermarket called ‗Chintamani‘ in Coimbatore (T.N) arranges free transit of rural consumers to the supermarket of their purchases. 9. Joint distribution by Non-competing Companies: As the cost of distributing the products in the rural market through distribution vans can be unviable for a single company, different non-competing companies can come together to jointly operate distribution vans for the rural market. This will enable them to share the cost of operating the van & on account of the sharing of the cost by four or five companies; the entire operation can become financially viable for all the players. 10. Personal Selling Network: It is very successful distribution channel being developed by companies like HUL. It adds a personal touch to the marketing, as the salesmen are the resident of the village or community itself, making it easier to sell the product & maximise sales for the company.

Rural marketing THE OLD SETUP The historically available people & places for distribution include: - Whole seller, Retailer, Vans, Weekly Haats, and Bazaars & Shadies.

Wholesalers The Indian wholesaler is principally a Galla – Kirana (food-grain) merchant who sustains the belief that business is speculative rather than distributive in character. He is a trader / commodity merchant rather than a distributor and therefore tends to support a brand during boom and withdraw support during slump. The reason for this speculative character and dormant role of wholesalers are:Indian market was largely sellers market. There was no need for active sales growth. Companies laid more emphasis or retailers in urban areas, who are very large in number. As a result of retail based distribution was weakened. Rural markets were neglected by many. The occurrence of retail outlets was low. Therefore many companies were dependent on whole salers. The current need is to activate and develop wholesaler of the adjoining market as a distributor of products to rural retail outlets and build his loyalties to the company. Retailers 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. Village retailers have traditionally been among the most mobile of rural residents. CREDIBILITY: He enjoys the confidence of the villagers.

Rural marketing His views are accepted and followed by the rural people whose awareness and media exposure levels are low. (- The urban retailer is not trusted. He is seen as a businessman with profit motto. His view points are evaluated with other sources of information.) INFLUENCE LEADER: His role as influence leader is indisputable. From tender twig of neem to washing powder retailer testimony has been vital part of the product adoption process. The role of urban retailer is weak. The urban consumers have numerous sources of information. Although retailer‘s opinion is sought it may not be 100% believed and followed.  BRAND PROMOTER: In rural market retailers remains the deciding factor to sell particular brand. Retailers helps in identification and selection of brands, there is less influence of shelf displays and point of purchase promotion. Presence of spurious brands is an ample testimony to this view. - (The urban retailer has a limited role as a brand promoter. - He cannot directly, recommend the brands. - He is to intelligently drive home his recommendations, as  urban consumers do not trust him completely.  It is through shelf displays and incentive offers that he has to push the brands.)  RELATIONSHIP MARKETER Village retailer practices relationship marketing. He caters to a set of buyers who have income from immovable land resources and would be static over a much longer time span. The relationship could extend beyond three generations, backed by historical credibility of the retailer as a product referral.

Rural marketing

His customers base comprises largely the mobile service class prone to shift residence at least once, if not more, in less than a decade. This limits the time span and perspective of the retailer – customer relationship.) HARBINGER OF CHANGE In an environment relatively isolated from external developments, he has been harbinger of change. He is one of the main sources of information and opinion as well as supplier of product and services. (As against this, we find urban retailer, wielding limited influence in changing the product choices and quality of life of consumers.) Vans Mobile vans long since, have an important place in distribution and promotion of the products in villages. Weekly Haats, Bazaars, Shandies The haats are the oldest outlets to purchase household goods and for trade. These markets are very well organized with shopkeepers having preassigned spaces for them to sell their wares. A typical market is in an open field with ample space for displaying all sorts of goods. Its location changes every week. These markets have different names in different regions. But they are strikingly similar in what they sell. It is reported that there are, in all, about 47,000 haats held throughout the country. Media Vehicles Through the rural markets offer big attractions to the marketers, one of the most important questions frequently asked is ―How do we reach the large rural population through different media and methods?

Rural marketing Mass Media Radio Cinema Press TV

Local Media Haats, Melas, Fairs Wall Paintings Hoardings Leaflets Video Vans Folk Media Animal Parade Transit Media

Personalized Media Direct Communication Dealers Sales Persons Researchers

Formal media It includes Press and print, TV, Cinema, Radio, and Point of purchase and Outdoor advertisement. Reach of formal media is low in rural households (Print: 18%, TV: 27%, Cinema: 30%, and Radio: 37%) and therefore the marketer has to consider the following points: Newspapers and magazines: English newspapers and magazines have negligible circulation in rural areas. However local language newspapers and magazines are becoming popular among educated facilities in rural areas. Examples: Newspapers: Eenadu in A.P., Dina Thanthi in Tamil Nadu, Punjab Kesari in the North, Loksatta in Maharashtra and Tamil magazine Kumudam are very popular in

rural areas. Television: It has made a great impact and large audience has been exposed to this medium. HLL has been using TV to communicate with the rural masses. Lifebuoy, Lux, Nihar oil etc are some of the products advertised via television. Regional TV channels have become very popular especially in

Rural marketing Southern states. Examples: SUN TV is very popular even in rural areas in Tamil Nadu and

Asianet is a preferred regional channel in Kerala. Many consumer goods companies and fertilizer companies are using these TV channels to reach the rural customer. Radio: Radio reaches large population in rural areas at a relatively low cost. Example: Colgate, Jyoti Labs, Zandu Balm, Zuari industries are some of the companies using radio communication programme. There are specific programmes for farmers like Farm and Home/Krishi Darshan in regional languages. The farmers have a habit of listening to regional news/agricultural news in the morning and the late evening. The advertisement has to be released during this time to get maximum coverage in rural areas. Another advantage is that the radio commercial can be prepared at short notice to meet the changing needs of the rural folk. Example: Release of a pesticide ad at the time of outbreak of a pest or disease in crops. Cinema: About 65% of the earnings from cinema are from rural markets. Film viewing habits is high in certain states like Tamil Nadu, Karnataka and Andhra Pradesh. Village theatres do roaring business during festivals by having four shows per day. The monthly charge for showing an ad film is within Rs.500. Local distributor or dealer who has good contacts with cinema houses in villages can easily monitor this activity. Examples: Films on products like Vicks, Lifebuoy and SPIC fertilizers are shown in rural cinema halls. Apart from films, Ad slides can also be screened in village theatres. Outdoor advertisements: This form of media, which includes signboards, wall painting, hoarding, tree boards, bus boards, dealer boards, product display boards etc, is cost

Rural marketing effective in rural areas. Symbols, pictures and colours should be used in POPs meant for rural markets so that they can easily identify the products. Generally rural people prefer bright colours and the marketer should Utilize such cues. Point of purchase: Display of hangings, festoons and product packs in the shops will catch the attention of prospective buyers. However a clutter of such POP materials of competing companies will not have the desired effect and is to be avoided. Direct mail advertising: It is a way of passing on information relating to goods or services for sale, directly to potential customers through the medium of post. It is a medium employed by the advertiser to bring in a personal touch. In cities lot of junk mail is received by all of us and very often such mails are thrown into the dustbin whereas a villager get very few letters and he is receptive to such mailers. Wall paintings: It is an effective and economical medium for communication in rural areas, since it stays there for a long time depending upon the weather conditions. The cost of painting one square foot area is just Rs.10. Retailers welcome painting of theirshops so that the shop will look better. Walls of farm houses, shops and schools are ideal places for painting and the company need not have to pay any rent for the same. The walls have to be painted at least one or two feet from ground level. It is better to take permission of the owner. Very often the owner takes responsibility for taking care of the wall painting. Painting to be avoided during election time and rainy season. The matter should be in the form of pictures, slogans for catching the attention of people. Companies marketing TV, fans, branded coffee/tea, toothpaste, pesticides, fertilizers etc. use wall painting as promotion medium in rural areas.

Rural marketing Informal/Rural specific media These media with effective reach and personalized communication will help in realizing the promotional objectives. Companies to suit the specific requirements of rural communication are using a variety of such media effectively and some of the more important media and methods are given below. Farm-to-Farm/House-to-House visit: Rural people prefer face-to-face communication and farm visits facilitate two-way communication. The advantage is that the sales person can understand the needs and wants of the rural customer by directly discussing with him and answer his queries on products and services. Potential customers in the village are identified and the company‘s/distributor‘s representative makes farm-to-farm visits and highlight the benefits of the products. The person carries with him literature in local language and also samples of products. The person does not sell the product but only promotes the use of the product. Very often the local dealer also joins the representative in making farm-to-farm visits. The dealer clarifies the terms and conditions of sale and also makes independent follow up visits for securing orders. Example: This approach has been found to be very effective for agricultural machinery, animal health products and agricultural inputs. Many LIC agents and companies dealing with high value consumer durables have tried this method with success in rich rural areas. Group meeting: Group meetings of rural customers as well as prospects are an important part of interpersonal media. The company is able to pass on the message regarding benefits of the products to a large number of customers through such meetings. Group meeting of key customers are conducted by banks, agricultural inputs and machinery companies in rural areas. The bankers visit an identified village, get the village people in a common place and explain the various schemes to the villagers. Such meetings could be organized in prosperous villages for promoting consumer durables and two

Rural marketing wheelers also. Example: MRF Tyres conduct tractor owners meet in villages to discuss repairs and maintenance of tractors.

Opinion leaders: Villagers place more emphasis on the experience of others who have used a product/brand to make purchase decision. Opinion leader is a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. Such opinion leaders could be big landlords, bank official, panchayath-president, teachers, extension workers etc. Examples: a) Mahindra Tractors use bankers as opinion leaders for their product. b) Asian Paints promoted its Utsav brand of paint by painting the village Sarpanch‘s house a few months prior to the launch if the branch to demonstrate that the paint does not peel off. The Melas: Melas are of different types i.e. commodity fairs, cattle fairs and religious fairs and may be held only for a day or may extend over a week. Many companies have come out with creative ideas for participating in such melas. Examples: a) Britannia promotes Tiger Brand Biscuits through melas. b) The mahakumbh at Allahabad is the biggest mela in India. HLL has put up 14 stalls in the mela grounds for promoting Lifebuoy. Handcarts have been deployed for increasing access. The Haats: Traditionally on certain days of week, both the sellers and buyers meet in the village to buy and sell goods and services. These are the haats that are being held regularly in all rural areas. The sellers arrive in the morning in the haat and remain till late in the evening. Next day they move to another haat. The reason being that in villages the wages are paid on weekly basis and haat is conducted on the day when the villages get their wages. For the marketer, the haat can be an ideal platform for advertising and selling of goods. By participating in haats and melas, the company can not only promote and sell the products but also understand the shared values,

Rural marketing beliefs and perceptions of rural customers that influence his buying behaviour. Folk dances: These are well-appreciated form of entertainment available to the village people. The folk dance ―Kuravan Kurathi‖ is popular in Tamil Nadu. The troupe consists of dancers, drummers and musicians and they move in a well-decorated van from one village to another village singing and dancing. In a day the troupe covers about 8-10 villages. As soon as the van reaches a village, film songs are played to attract the attention of the villages. This is followed by folk dances. Mike announcement is made about the company‘s products and leaflets are distributed. After the dance programme, queries, if any, about the products are answered by the sales person. Folk dance programme costs about Rs.5000 per day and therefore these programmes are conducted during the peak season in selected villages. Examples: Fertilizer and pesticide companies organize folk dance programmes during peak season in selected markets. Thumps Up has sponsored Lavnis, the folk dance programme of Maharashtra and over 30 programmes have been arranged in selected rural markets.

Audio Visual Publicity Vans (AVP Vans): AV unit is one of the effective tools for rural communication. The van is a mobile promotion station having facilities for screening films slides and mike publicity. The sales person makes a brief talk about situation in the village, the products and the benefits. The ad film is screened along with some popular film shots and this continues for about 30 minutes. At the end of the film show, he distributes handbills and answers queries of the

Rural marketing customers. The whole operation takes about 1-2 hours depending upon the products under promotion, number of participants in the meeting and time taken for question and answers. The vans move to the next village for the second show. The cost of running a fully equipped AVP unit is about Rs.4000 per day and AVP van operation has to be considered as an investment for business development in rural areas. Example: Companies such as HLL, Colgate, and Phillips have made effective use of AVP vans for popularizing their products in rural areas. Product display contests: Package is an integral part of the product. Its main purpose is to protect the product during transit, to preserve the quality and to avoid any loss in quality and quantity. The main purpose of this contest is to remind the customer to buy the product as soon as he enters the shop. Another objective is to influence the dealer to stock the product and support the company in increasing the sales. The display contest has to be announced well in advance and promotional materials to be distributed to all the selected dealers in a geographical area. Prizes for best displays are announced to motivate the dealers; the contest lasts for about a month. A well-planned product display contest not only increases the involvement of dealers in the company‘s products but also increases the sales during the contest period. This is used for promoting consumer goods such as shampoos, soaps and toothpaste. Field demonstration: This is based on the extension principle ―seeing is believing‖ and is one of the most effective methods to show the superiority of the company‘s products to the customers. A progressive farmer who is an opinion leader is selected and the demonstration is conducted in his field in the presence of a group of farmers in the village. The farmers observe the results in the field and the local dealer calls on them in their farms and persuades them to buy the particular brand of pesticide or fertilizer. Examples: a) Spraying a particular brand of an insecticide against insect pests and showing the farmer how effectively the insects are controlled. b) Demonstrating the use of tractor/implements for different agricultural operations. c) Hawkins

Rural marketing pressure cooker has demonstration representatives who carry out demos in rural households. The representative receives 1% commission for every customer who approaches the dealer via demonstrations. e) Similarly effectiveness of detergents, pressure cookers, vaccum cleaners and mosquito coils could be promoted by demonstrations in selected markets. Field days: These are extension of field demonstrations. One of the main objectives of following modern agricultural practices is to increase the yield. The company organizes demonstrations in a piece of land belonging to progressive farmers. All the fertilizers, pesticides, nutrients etc. are applied after making field observations. Just before harvest, all the important farmers are invited to see demonstration plot and see for themselves how the yields are better in the plot compared to other fields. Field demonstrations/field days consume lot of time and efforts and therefore have to be planned well. Information centers: They provide latest information on cultivation of crops, fertilizer application, weed, management and control of pests and diseases. Experienced agricultural graduates who make frequent visits to the field and advice farmers on modern agricultural practices manage the centers. They also provide information on farm implements, seeds, fertilizers, pesticides, diesel engines, sprayers and tractors etc. Many consumer goods companies have opened show rooms in prosperous rural areas. Example: Hero Honda has opened extension counters with show room facilities in major rural markets. Life-style marketing: Each rural market segment has certain special features i.e. they share common life-style traits. They include village sports, religious events, prominent personalities and role models. Examples: Textile mills maintaining community gardens, Mineral water companies supplying clean drinking water during summer festivals in villages and Consumer goods companies sponsoring Kabaddi.

Rural marketing

Choosing media vehicles The choice of different media vehicles for any market is based on an analysis of the standard features like: reach, frequency, cost & availability. Depending on the factor of reach & frequency, the different media can be classified into the following categories. This categorization can help the marketer to make a decision about which type of media would be more suitable to the product & the organization. - High reach High frequency - Jeep based advertising - Wall painting - Bus stand & bus panels - Haats - Hoardings - Postal branding - Low reach High frequency - Co-operative notice board - Shop front painting - Tin plating – house - Dealer boards - Village boards - Well tiles - Calendars/labels -

High reach Low frequency Van based advertising Melas Direct to home Folklore group Exhibitions/created events Low reach Low frequency Tin painting – tree/shops Leaflets Posters & banners Streamers

Rural marketing

 Suggestions &recommendations The researcher would like to suggest the following points, so that the organizations can easily sell their products to their consumers: 1. However, the demand of a product is also affected by its life cycle. If the product is in the introduction stage, then it will definitely take some time to capture the market, because in the introduction stage, consumers are not much aware about the product. Therefore, it is the responsibility of the organization to create awareness amongst the consumers. 2. They should adapt rigorous marketing strategies, in order to sustain in the market. 3. There is immense competition in this sector. Therefore, the organizations should try to gain competitive advantage against their competitor‘s. 4. They should try to reach as many people as possible. 5. for the organizations that are not much popular amongst the consumers should adopt Sales Promotion, as their marketing strategies. 6. Application of 4A‘s has also become an important task for all the organizations. (*4A=Availability, Affordability, Acceptability, Awareness)

Rural marketing

 CONCLUSION  The practical application of rural consumer behavior findings in Indian markets has often posed a problem for marketers for two reasons.  First, most consumer researches in rural market has used a piecemeal approach. Second, there has been no comprehensive framework to integrate the findings in a meaningful manner.  The paradigm is an attempt which provides a comprehensive framework that will enable marketers to understand ,Integrate and apply consumer behavior in the rural market. Much of the discussion in this article had noted the possibilities of establishing the footholds in rural market. First, these kinds of markets are heterogeneous; hence the marketer should frame different strategies to sell their products. However it must be noted that it is possible to capitalize on the similarities among the rural markets.  The most important difference between rural and urban is in the degree of sophistications of the consumers. Urban consumers are generally familiar with such products, their attitude and value related to purchase and consumption will be different.  Here the marketer may have to work harder to sell their goods in rural area because of diversity of values and attitudes present in these regions.

Rural marketing