Rural Marketing

A Report On “RURAL MARKETING”

Submitted By:Manish K Sarjare

1

Executive Summary A debate debate continu continued ed for a long long time time amongs amongstt the Indian Indian market marketers ers,, both both practi practitio tioner nerss & academicians, on the justification for the existence of the distinct discipline of rural marketing. Cons Conseq eque uent ntly ly,, two two scho school olss of thou though ghtt emer emerge ged. d. The The firs firstt scho school ol beli belive ved d that that the the   products/services, marketing tools & strategies that are successful in urban areas, could be transplanted with little or no more modifications in rural areas. However, the second school saw a clear distinction between urban & rural India, & suggested a different approach, skills, tools & strategies to be successful in rural markets.

What differentiates the two markets is not mere income, but a host of other infrastructural & socio-cultural factors. Thus, the rural market cannot be tapped successfully with an urban marketing mindset & would definitely require its thorough understanding. In other words, the approach toward rural markets needs to be distinct from the one adopted for the urban markets.

Thus, in a large rural economy like India’s, rural marketing has emerged as an important & distin distinct ct intern internal al sub-di sub-divis vision ion within within the market marketing ing discip disciplin line. e. This This sub-di sub-divis vision ion clearl clearly y highlights the differences between rural marketing & mainstream marketing.

2

Table of contents

1) Rura Rurall mark market etin ing g

3

2) Evolution of rural marketing

4

3) Nature of rural market

8

4) Rural marketing transactional or developmental

9

5) Cl C lassification of rural consumers

11

6) Roadblocks of Indian Rural Markets

12

7) Attractiveness of rural market

14

8) Rural Vs Urban Marketing

19

9) Rural consumer behavior

22

10) 4 A’s approach of Indian Rural Market

25

11) Rural marketing Mix

28

12) Marketing strategies to capture rural market

37

1 2 .1 .

Product strategies

42

1 2 .2 .

Pricing strategies

44

1 2 .3 .

Promotion strategies

45

1 2 .4 .

Distribution strategies

46

13) Media vehicles

53

1 3 .1 .

Formal media

54

1 3 .2 .

Informal/rural specific media

57

1 3 .3 .

Choosing media vehicles

64

14) Conclusion

65

15) References

66

3

Rural Marketing

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

URBA URBAN N

RURAL RUR AL

RURA RURAL L

URBAN URBAN

RURA RURAL L

RURAL RUR AL

It is a two-way marketing process wherein the transactions can be:

1. 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. 2. Rural Transa sact ctio ions ns in this this categ categor ory y basic basical ally ly fall fall under under agri agricu cult ltur ural al Rural to Urban Urban: Tran 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. 3. Rural to Rural: This includes the activitie activitiess that take place between two villages villages in close proximity to each other. The transactions relate to the areas of expertise the  particular village has. These include selling of agricultural tools, cattle, carts and others to another village in its proximity.

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Rural marketing requires the understanding of the complexities. Indian agricultural industry has  been growing at a tremendous pace in the last few decades. The rural areas are consuming a large number of industrial and urban manufactured products. The rural agricultural production and consumption process plays a predominant role in developing the Indian economy. This has designed a new way for understanding und erstanding a new process called Rural Marketing.

The concept of rural marketing has to be distinguished from Agricultural marketing. Marketing is the process of identifying and satisfying customers needs and providing them with adequate after sales service. Rural marketing is different from agricultural marketing, which signifies marketing of rural products to the urban consumer or institutional markets. Rural marketing  basically deals with delivering manufactured or processed inputs or services to rural producers, the demand for which is basically a derived outcome.

Rural marketing scientists also term it as developmental marketing, as the process of rural market marketing ing involv involves es an urban urban to rural rural activi activity, ty, which which in turn turn is charac character terise ised d by variou variouss  peculiarities in terms of nature of market, products and processes. Rural marketing differs from agricultural or consumer products marketing in terms of the nature of transactions, which includes participants, products, modalities, norms and outcomes. The participants in case of  Rural Marketing would also be different they include input manufacturers, dealers, farmers, opinion makers, government agencies and traders.

Rural marketing needs to combine concerns for profit with a concern for the society, besides  being titled towards profit. Rural market for agricultural inputs is a case of market pull and not market push. Most of the jobs of marketing and selling are left to the local dealers and retailers. The market for input gets interlocked interlocked with other markets like output, consumer goods, money and labour.

Rural marketing in India is not much developed there are many hindrances in the area of  market, product design and positioning, pricing, distribution and promotion. Companies need to understand rural marketing in a broader manner not only to survive and grow in their business,  but also a means to the development of the rural economy. One has to have a strategic view of  the rural markets so as to know and understand the markets well. In the context of rural market marketing ing one has to underst understand and the manipulat manipulation ion of market marketing ing mix has to be proper properly ly 5

understood in terms of product usage. Product usage is central to price, distribution, promotion,  branding, company image and more important farmer economics, thus any strategy in rural marketing should be given due attention and importance by understanding the product usage, all elements of marketing mix can be better organised and managed.

Evolution of Rural Marketing

PHASE

I

ORIGIN

FUNCTION

MAJOR 

SOURCE

DESTINATION

PRODUCTS

MARKET

MARKET

Rural

Urban

Urban

Rural

Rural

Before Mid1960 (from

Agricultural

Agricultural

independence

Marketing

Produce

(Green

Marketing Of 

Agricultural

revolution to

Agricultural

Inputs

Pre-

Inputs

to green II

revolution) Mid- Sixties

liberalization III

IV

 period) Mid- Nineties

Consumables

(Post-

Rural

And

Urban &

liberalization

Marketing

Durables For 

Rural

 period on 20th

Consumption

century)

& Production

21st century

Developmental

All products &

Urban &

Urban &

marketing

services

Rural

Rural

1. Phase Phase I ( from Inde Independ pendenc encee to Green Green Revolut Revolution) ion)::

6

Before the advent of the Green revolution, the nature of rural market was altogether  different. Rural marketing then referred to the marketing of rural products in rural & urban products. 2. Phase Phase II (Green (Green Revolutio Revolution n to Pre-liber Pre-liberaliz alizatio ation n period): period):

During these times, due to the advent & spread of the Green Revolution, rural marketing repres represent ented ed market marketing ing of agricu agricultu lture re inputs inputs in rural rural market marketss & market marketing ing of rural rural  produce in urban areas. 3. Phase III (Post-liberalization period on 20 th century): The third phase of rural marketing started after the liberalization of the Indian economy. In this period, rural marketing represented the emerging, distinct activity of attracting & serving rural markets to fulfill the need & wants of rural households, peoples & their  occupations. 4. Phase IV (21st century): Learning from its rural marketing experiences after the independence, the corporate world has finally finally realized the quick-fix quick-fix solutions solutions & piecemeal piecemeal approaches approaches will deliver  deliver  only limited results in the rural markets. And, if an organization wants to tap the real  potential of the rural market, it needs to make a long-term commitment with this market. Its approach & strategies must not focus in just selling products & services, but they should also aim at creating an environment for this to happen.

The objective of rural marketing in the current phase is the improvement of the quality of life  by satisfying the needs & wants of the customers, not through atand-alone products or services,  but by presenting comprehensive & integrated solutions which might involve a set of interrelated products & services.

Till recently, the focus of marketers in India was the urban consumer and by large number  specific efforts were made to reach the rural markets. But now it is felt that with the tempo of  development accelerating in rural India, coupled with increase in purchasing power, because of  scientific agriculture, the changing life style and consumption pattern of villagers with increase in education, social mobility, improved means of transportations and communication and other   penetrations of mass media such as television and its various satellite channels have exposed rural India to the outside world and hence their outlook to life has also changed. Because of all these factors, rural India in now attracting more and more marketers. 7

Increase in competition, saturated urban markets, more and move new products demanding urban customers, made the companies to think about new potential markets. Thus, Indian rural markets have caught the attention of many companies, advertisers and multinational companies. Accord According ing to a recent recent survey survey conducted conducted by the Nation National al Counci Councill for Applied Applied Econom Economic ic Research (NCAER), the purchasing power of the rural people has increased due to increase in  productivity and better price commanded by the agricultural products. By and large this rise in  purchasing power remains unexploited and with the growing reach of the television, it is now quite easy for the marketers to capture these markets.

Rural marketing has become the latest mantra of most corporate. Companies like Hindustan Lever, Colgate Palmolive, Britannia and even Multinational Companies (MNCs) like Pepsi, Coca Cola, L.G., Philips, Cavin Kare are all eyeing rural markets to capture the large Indian market.

Coming to the frame work of Rural Marketing, Rural Marketing broadly involves reaching the rural customer, understanding their needs and wants, supply of goods and services to meet their  requirements, carrying out after sales service that leads to customer satisfaction and repeat  purchase/sales.

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 8

literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax struct structure ure,, good good monsoon monsoon,, governm government ent regula regulati tion on on pricin pricing g has create created d disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him.  Traditional 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 changing due to literacy especially 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 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, w arehouses,

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.

Is rural marketing transactional or developmental in its approach?

It is true, true, rural rural market marketss have become become an attrac attractiv tivee propos propositi ition on for commer commercial cial busine business ss 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.

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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.No. 1.

2. 3. 4. 5. 6.

7.

Aspect Concept

Transactional Consumer orientation,

Development Society orientation, societal

Marketing concept

concept

Role

Stimulating and

Catalytic and transformation

Focus Key task

conversional marketing Product-market fit Product innovations and

agent Social change Social innovations and

Nature of activity Participants

communications Commercial Corporate enterprises,

communications Socio-cultural, economic Government, voluntary agencies,

Sellers

corporate enterprises,

Products and services

 benefactors Development

Buyers Functional Profits

 projects/schemes/programs Beneficiaries and buyers Developmental Market development

Customer satisfaction

Corporate Image

Brand image Short-medium Profit-motive

Medium-Long Service-motive

Business policy

Ideological or Public policy

Offer

8. 9. 1 0.

Target group Communication Goal

1 1. 1 2.

Time-Frame Motivation

model of rural rural market marketing ing repres represent entss a combin combinati ation on of the trans transact action ional al and Model: The model 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. 10

•

Innova Innovatio tion n is the essenc essencee of market marketing ing.. Innovat Innovative ive methods methods of social social change change for  successful successful transformat transformation ion of traditional traditional society are virtual. 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 inst instru rume ment ntss of chan change ge rath rather er than than const constit itut utee just just shor shortt-te term rm oppo opport rtuni uniti ties es for  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   betwe between en rural rural and urban as well well as within within rural rural areas. areas. Anothe Anotherr critic critical al point point for  communication is the point of conversion of ruralite from an "induced beneficiary" to an "autonomous buyer".

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 fast expandi expanding. ng. Farmer Farmerss culti cultivati vating ng sugar sugar cane cane in UP and Karnat Karnataka aka fall fall in this this category.

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•

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 dblocks of Indi I ndian an Rural Rural Markets Mar kets 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.

1. 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. 2.

Low literacy levels : The low literacy levels in rural areas leads to a problem of 

comm commun unic icat atio ion. n. Print rint medi mediaa has has less less util utilit ity y comp compar ared ed to the the othe otherr medi mediaa of  communication. 3.

Low per capita income : Agriculture is the main source of income and hence spending

capacity depends upon the agriculture produce. Demand may not be stable or regular. Transportation and warehousing warehousing : Transportation is one of the biggest challenges in 4. Transportation

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 market marketers ers use tract tractors ors or bulloc bullock k carts carts in rural rural areas areas to distri distribut butee their their produc products. ts. Warehousing Warehousing is another major problem problem in rural areas, as there is hardly any organized 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.

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5.

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. 6.

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. 7.

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 rate in the the rura rurall area areass is rath rather er low low and and consu consume mer’ r’ss behav behavio iour ur in thes thesee area areass is traditional, which may be a problem for effective communication. 8. Spurious brands : Cost is an important factor that determines purchasing decision in rural areas. A lot of spurious brands or look-alikes are available, 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. 9. 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: Rura 10. Dispersed Rurall popul populat atio ion n is highl highly y disp disper erse sed d and and requi require ress a lot lot of 

marketing efforts in terms of distribution and communication.

Attractiveness of rural market

13

1

Large pop population

2

Risi Rising ng pros prospe perrity ity

3

Grow Growtth in in con conssumpt umptiion

4

Life cy cycle ch change nges

5

Life Life cycl cyclee adv advan anttages ages

6

Mark Market et gro growt wth h rate rate hig highe herr than than urban urban

7

Rura Rurall mar marke keti ting ng is not expe expens nsiv ivee

8

Remo Remote tenes nesss is is no no lon longe gerr a pro probl blem em

1.

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.

2.

Rising Rural Propensity:

14

INCOME GROUP ABOVE R S. 100,000 R S. 77,001-100,000 R S. 50,001-77,000 R S. 25,001-50,000 R S.25,000 & BELOW

1994-95 1 .6 2 .7 8 .3 2 6 .0 6 1 .4

2000-01 3.8 4.7 13.0 41.1 37.4

2006-07 5 .6 5 .8 2 2 .4 4 4 .6 2 0 .2

Thus we see see that that population population between between income income level of Rs. Rs. 25,00025,000- 77,000 will increase 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.

3.

Growth in consumption:

PER  CAPITA HOUSEHOLD EXPENDITURE (IS R S.) LEVEL

NO.

High

7

(Above Rs 382/-)

Average

5

(Rs. 382/-) Low

3

(Below Rs. 382/-)

STATES Punjab Kerala Haryana Rajasthan Gujarat Andhra Pradesh Maharastra West Bengal Orissa Tamil Naidu Uttar Pradesh Karnataka Assam Madhya Pradesh Bihar

EXPENDITURE 614 604 546 452 416 386 384 382 381 381 373 365 338 326 289

Distribution household’s income wise (projection in Rs Crore)

INCOME GROUPS HIGH MIDDLE LOW

2001 – 02 URAL R URAL TOTAL NO. 0 .2 6 0.07

12.04 5 .7

% 2 6.

2006 – 07 URAL R URAL TOTAL NO. 0.52 0.12

% 23.1

7.73

9 6 4.

16.72

1 0.3

61.8

5.09

2 8 8.

3.68

2 3.52

95.7 15

TOTAL

18.04

12.8

7 71.

9

4

20.90

1 3.9

66.7

6

Spending pattern (Rural Household’s in Rs.)

ITEM FOOD ARTICLES TOILETRIES WASHING MATERIAL COSMETICS OTC PRODUCTS OTHERS TOTAL

ICH % R ICH 4 147 4 2 67 0 1 43 3 1 33 0 4 13 9 30 333

POOR 

AVERAGE

73

95

33

43

22

28

17

21

6 15 166

9 19 215

Aver Averag agee rura rurall house househol hold d spen spends ds on cons consum umab able less excl exclud udin ing g food food grai grains ns,, milk milk & vegetables are Rs. 215/-.

4.

Life style changes:

Income vs. usage of packed consumer goods (% of household using)

16

MONTHLY HOUSEHOLD INCOME (R S.) UP TO 350 351 –   751 –   1501 +

GOODS WASHING CAKES/BARS TOILET SOAPS TOOTH PASTE/POWDER  TALCUM POWDER  TEA (PACKAGED) 5.

60 57 22 20 22

750 78 72 36 25 30

1500 86 89 65 41 48

91 93 85 63 64

Life cycle advantage:

STAGES IN LIFE CYCLE

PRODUCT

URBAN

MARKET GROWTH

R ATE ATE % Popular soaps Maturity 2 Premium soaps Late growth 11 Washing powder Late growth 6 Skin creams Maturity 1.1 Talcum powder Maturity 4

6.

URAL R URAL

Growth Early growth Early growth Growth Growth

Market gr growth ra rates hi 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.

Conventional wisdom dictates dictates that since rural 7. Rural market marketing ing is not expensiv expensive: e: Conventional 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 Cror Croree to prom promot otee a consu consume merr dura durabl blee insi inside de a stat state. e. This This incl include udess the the expen expense sess 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.

8. Remoten Remoteness ess is no longer longer a proble problem: m: Remoteness in a problem but not insurmountable.

The rural distribution is not much developed for the reasons, 17

Lack of proper proper infras infrastru tructu cture re such such as all-we all-weath ather er roads, roads, electr electrifi ificati cation on and  Lack sanitation, and  Lack of marketer’s imagination and initiative.

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.

URAL VS URBAN MARKETING-SUMMARY R URAL

NO. 1

ASPECT

PHILOSOPHY

URBAN Marketing & Societal

R URAL URAL Marketing & Societal

Concepts &

Concepts,

Relationship

Development

Marketing

Marketing & Relationship Marketing

2

A)

MARKET

18

B)

DEMAND C) COMPETITION CONSUMERS LOCATION LITERACY INCOME EXPENDITURE NEEDS INNOVATION/ADOPTION

3

4

PRODUCT AWARENESS CONCEPT POSITIONING USAGE METHOD QUALITY PREFERENCE PRICE SENSITIVE LEVEL DESIRED

5

Low 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 Easily Grasped Good

Low Less Known Difficult Difficult To Grasp Moderate

Yes Medium-high

Very much Medium-low

Wholesalers, stockists,

Village shops,

retailer, supermarket,

“Haats”

DISTRIBUTION

CHANNELS

TRANSPORT FACILITIES PRODUCT AVAILABILITY

6

High Among Units In

specialty stores, & authorised showrooms Good High

Average Limited

Print, audio visual

TV, radio, print media

media, outdoors,

to some extent. More

exhibitions etc. few

languages

languages Door-to-door,

Occasionally

frequently Contests, gifts, price

Gifts, price discounts

discount Good op opportunities

Less op opportunities

PROMOTION

ADVERTISING

PERSONAL SELLING SALES PROMOTION PUBLICITY

Special Products for Rural Markets:

19

•

Rural Transporter: Mahindra & Mahindra is busy developing the prototype of what it

calls a ‘Rural Transporter’ – basically a hybrid between a tractor 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, copy copyca catt prod product ucts. s. He dupe dupess the the gull gullib ible le cust custom omer er by offe offeri ring ng prod product uctss havi having ng clos closee 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 in the sense 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.

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

Old Products

New Products

20

Brushing Teeth

Neem sticks, Charcoal,

Toothpaste, tooth powder 

Washing Vessels

Rocksalt, Husk  Coconut fiber, Earthy

Washing Powders, soaps

Transport

materials, Brick Powder, Ash Bullock Cart, Horses,

and liquids Tractors, LCVs, Mopeds,

Irrigation

Donkeys Wells, Canals, Water lifters,

Scooters, Motor cycles Bore-wells, Motors, Power 

Hair Wash

Wind Mills Shikakai powder, Retha,

Generators, Pump Sets Shampoos and hair care

Besan

soaps

21

Rurall Cons Rura Consume umerr Beha Behavio viour ur Consumer Buyer Behaviour refers to the buying behaviour of final consumers - individuals and households who buy goods and services for personal consumption. All of these final consumers combined make up the consumer market. The consumer market in this case is Rural India. About 70% of India’s population lives in rural areas. There are more than 600,000 villages in the country as against about 300 cities and 4600 towns. Consumers in this huge segment have displayed vast differences in their purchase decisions and the product use. Villagers react differently to different products, colours, sizes, etc. in different parts of India. Thus utmost care in terms of understanding consumer psyche needs to be taken while marketing products to rural India. Thus, it is important to study the thought process that goes into making a purchase decision, so that marketers can reach this huge untapped segment.

Factors influencing buying behavior The various factors that affect buying behavior of in rural India are: 1.   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. 2. 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. 3. Family   – it is an import important ant buying buying decisi decision on making making organi organizat zation ion in consume consumer  r  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 22

with the size of the family & that’s where rural India with joint family structures,  becomes an attractive proposition. 4.   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 occupation. More than 70% of the  people are in small-scale agricultural operation. These factors affect the purchase decision. 5.  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. 6. 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 prefere preference nce and loyalt loyaltyy (80% 7.   Brand (80% of sale sale is bran brande ded d item itemss in 16 prod produc uctt

categories)

Cultural factors influencing consumer behaviour Cultural factors exert the broadest and deepest influence on consumer behaviour. 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 behaviour. beha viour. 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 behaviour are: 1.  Product  (colour, size, design, and shape): There are many examples that support this  point. a. For For exam exampl ple, e, the Tata Sumo, Sumo, which which was launch launched ed in rura rurall Indi Indiaa in a whit whitee colour, was not well accepted. But however, when the same Sumo was re-

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launched 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.  b. Another Another good exampl examplee would be Philips Philips audio audio systems systems.. Urban India 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 practices: There 2.   Social There are so many many differ different ent cultures cultures,, and each cultur culturee exhibi exhibits ts

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. 3.  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. 4. Changes in saving and investment patterns From gold, land, to tractors, VCR’s, LCV’s

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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. 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 autorickshaws, bullock-carts 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 compan company y depot depot suppli supplies, es, twice twice a week, week, large large distri distribut butors ors which who act as hubs. hubs. These These distri distribut butors ors appoin appointt and supply supply,, once once a week, week, smalle smallerr distri distribut butors ors in adjoin adjoining ing areas. areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semiurban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote area offices.

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»

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.God consumers.Godrej rej recently introduced introduced three brands of Cinthol, Cinthol, Fair Glow and Godrej 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 mainly target targeted ed at the rural rural market market.. Coca-C Coca-Cola ola has addres addressed sed the afford affordabi abilit lity y issue 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. Coca-Cola 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. »

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 total premi premium. um. The company company tied tied up with with non-gove non-governm rnment ental al organi organizat zation ionss and offere offered d 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 26

urban and rural consumer, the family is the key unit of identity. However, the rural consumer  expressions expressions differ from his urban counterpart. counterpart. Outing for the former is confined 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 awareness is another challenge. Fortunately, 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 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 fast-growing rural market is whether  they can do so without hurting the company's profit margins.

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Evolving a New Marketing Mix for Selling to Rural Indians 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 r ope and the serpent.

The rural market is not homogeneous. Though the aggregate size is very large, individual subsets of this market market tend to be rather rather small and disparate disparate.. Geographi Geographical, cal, demographi demographical, cal, statistic statistical, al, logistic logistical al 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 a nd 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 f orefront 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.

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Product The Rural marke markett is not not a homog homogeno enous us set of custom customers ers with with prefer preferenc ences es frozen frozen in time. time. When 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.

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 which the consum consumer er is willi willing ng to pay (value (value-ad -addin ding g featu features res). ). Produ Product ct develo developer perss shoul should d aim at eliminating all the cost-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 Product developme development nt is severely severely constrained constrained by legislat legislation ion in the case of agricultu agricultural ral inputs 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. 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.

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This This would would be a major major polic policy y initia initiativ tivee that that would would give give a huge huge impetu impetuss to innova innovativ tivee produc productt 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-AL Principle of  Partnership - Alliances - Linkages is a basis for survival.

Pricing 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 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 common.. Consum Consumers ers seem seem to create create narrow narrow psycho psycholog logica icall price price bands bands in their their minds minds for   product groups and price elasticity beyond the extreme price points is 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.

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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   purch purchase ase decisi decisions ons of the rural rural popula populatio tion. n. Demon Demonstr strati ation onss establ establish ish the creden credentia tials ls 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 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 The clas classi sicc conu conund ndru rums ms of reac reach h and and cove covera rage ge of the the media media are are shat shatte tere red. d. Seve Severa rall crea creati tive ve 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, India, more often often than than not, not, the overlap overlap betwee between n the product product catego categorie riess sold sold in a single single outlet 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.

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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 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 market marketers ers must must addres addresss brand brand messag messages es in their their campai campaign gnss at severa severall levels levels.. Apart Apart from from regula regular  r  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 r elative 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 gen erally used: Television. Cinema Radio Print media: Handbills and Booklets, posters, stickers, banners, etc. 2.

potential 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 p rogressive farmers. 32

3.

During crop harvest and marketing marketing seasons seasons it is beneficial beneficial to take up Special campaigns: campaigns: During

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 technology or high priced products 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 & 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

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retail retailers ers themse themselve lvess go to the urban urban areas areas to procur procuree these these goods. goods. Rural Rural market marketss imply imply comple complex x 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. 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.

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The distribution of outlets however shows that a marketer need not be present in all markets at all times. Being present in 6 lakh villages is virtually impossible for an organization of any size. Rural wealth and demand is concentrated typically at satellite towns, district headquarters, assembly markets and such central central locations locations.. Rural distributio distribution n has a rigid hierarchy hierarchy of markets markets that make channel channel decisions decisions relatively structured.

It is essential for rural marketing companies to understand this hierarchy. Rural folk are habituated to travelling once a week for their weekly purchases to a satellite town. They do not expect such items to  be present in every village. For durables where the outlay involved is typically large, the purchase would  be made in an assembly market for reasons of choice and availability of adequate cash flow. This is due to the fact that it is at assembly markets that auction yards are present where the farmers congregate to sell their output. After such sale of produce, they are cash rich and can afford to make such purchases. It is therefore not necessary for a marketer of TV sets to take their distribution channel all the way down to the village shop. A TV will not be sold there as the cash flow does not exist at that point in the hierarchy of markets. A television distributor must be present at assembly markets which are much smaller in number, more controllable, easier to reach and service. Keeping the hierarchy in mind will help decide the optimum level of penetration required to reach a critical mass of rural consumers.

Haats

Haats are the nerve centre of Rural India. They are a readymade distribution network embedded in the fabric of rural society for over 1000 years. They have been held on a regular basis across the length and  breadth of the country for over 1000 years. Right from the time of Chandragupta Maurya, Haats are seen as a place for social, cultural and economic interchange.

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One in every five villages with a population of over 2000 has a haat. In villages with less than 2000  people this figure reduces to 1 in 20 villages. Typically, an average haat will have close to 300 stalls. A haat usually serves around 5000 visitors. Considering that the average population of an Indian village is approximately 1000, each haat serves 5 villages. A study estimates that 47,000 haats are conducted in rural India. These rural super markets are much larger than all the world's K-marts and Wal-marts put together.

A lot of re-distribution also occurs through haats. This is because, a large number of retailers and subwholesalers buy from haats for their village stores. What is most attractive to marketers is that 90% + of  sales in haats are on cash basis. Traditionally, in village shops a lot of credit sales occur due to the fact that in a small geographic area of a village, everybody knows everybody. Considering that over 5000 visit a haat from 5 villages, the system gets derelationalised. Apart from the 90% cash sale, 5 to 7% is conducted on barter system and the rest 3 to 5% is on credit. Also attractive to companies wishing to use the system is the low selling overheads. Participation fees at haats are a flat Re.1 to Rs.5 per stall and this rate is common to a giant like Hindustan Lever and the smallest local seller.

Distribution costs must be reduced through optimum utilization of the network. Thus, incorporating haats in the distribution strategy of a rural marketing organization selling consumer goods and FMCG  products (typically once a week purchase items) is a tremendous opportunity.

Perhaps the other most important factor to consider while developing rural distribution strategy is that the move from transactional marketing to relationship marketing is most evident in the village market. A strong bond needs to be created with every c onsumer even in the remotest village and the smallest town. Marketing in Rural India is undoubtedly a long-haul exercise and one that involves great expense. Only those with a strong mind, a tough heart and stiff hands survive.

There is also a need to realise that the dealer is the company's "unpaid" sales force. It is essential to educate and involve him as he is the local company representative and is the only member in the channel of distribution that is in direct contact with the final consumer. The dealers' feedback needs to be obtained as the direction for future strategy emanates here.

MARKRTING STRATEGIES TO CAPTURE RURAL INDIA 36



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. app lied. 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    promo promotin ting g their their produc products. ts. They They have have starte started d selli selling ng the concept concept of qualit quality y with with proper  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

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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. etc. even even when when they they can use locall locally y manufa manufactu ctured red very very low priced priced soaps. soaps. Villager Villagerss 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 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 emotional and sensitive. sensitive. Thus, to promote promote their brands, brands, they are exploiting exploiting social and cultural 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

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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".

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 Many compani companies es are develo developin ping g ruralrural-spe specif cific ic product products. s. Keepin Keeping g into into consid considera eratio tion n 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 an d to withstand long power cuts.

BY GIVING INDIAN WORDS FOR BRANDS

39

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 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  people believe these brands. brands. Similarly Similarly Coke has acquired Thumps Thumps up, Gold Spot, Citra 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 h ave 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 40

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

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 Melas are places places where where villag villagers ers gather once in a while while for shopping. shopping. Compani Companies es take 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 p aintings.

Product Strategies

41

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. This method has been tested by products life shampoos, pickles, biscuits, Vicks cough drops in single tablets, tooth paste, etc. Small packing’s stand 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’s 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 enviro environme nmenta ntall factor factorss must must be consid considere ered d while while develo developin ping g the produc products ts meant meant for rural 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

  produc productt should should be sturdy sturdy enough enough to stand stand rough rough handlin handling, g, transp transport ortati ation on & storag storage. e. The experi experience ence of torch torch light light dry batter battery y cell cell manufa manufactu cturer rerss suppor supports ts this this becaus becausee the rural 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.

42

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. seventies. Initially Initially the sales were good but declined subsequently. On 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  better cleanliness cleanliness with the yellow yellow colored bar as compared to the blue one although 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

43

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 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 p rice 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 number of FMCG FMCG produc productt categor categories ies,, in the rural markets markets of India. India. In categor categories ies 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. 44

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 markets: 1. Th Thin ink k Glob Global al Act Act Loc Local al

Rural population is diverse, but the commonalities of their ethos & simple living habits need need to be unde unders rsto tood od for for adve advert rtis isin ing g to succ succee eed. d. For For that that,, the the them themee of the 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. 2. Th Thin ink k in in Loc Local al Idio Idiom m

This is the need of the advertising professionals who can think like the rural people. The only we can have insights insights like ‘Thanda

matlab Coca Cola’ .

There should be the use of 

language writers who understands the rural & regional pulse better. 3. Simp Simpli lici city ty & Clar Clarit ity y

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 with too too much much,, in less less time time can can easi easily ly confu confuse se them them & leav leavee them them bewil bewilder dered ed.. 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. 4. Narr Narrat ativ ivee Stor Story y Styl Stylee

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. 5. Choic Choicee of Br Bran and d Amb Ambas assad sador or

45

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 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 marketers were of the opinion that the villagers 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.

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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   pop popul ulat atio ion n cove covere red d will will be subs substa tant ntia ial, l, to the the exten extentt of about about 40 to 45 perc percent ent.. With 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. 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 other multi multipur purpos posee coopera cooperati tives ves.. These These cooper cooperati atives ves have have an arrange arrangemen mentt for centra centraliz lized ed  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, oil47

engine pump sets and mopeds frequent these outlets for their requirement. These outlets can be  profitably utilized for selling consumables and durable items also. 6.

Distrib Distributio ution n up to feed feeder er markets markets/ma /mandi ndi towns: towns: Keeping in view the hierarchy of 

markets for the rural consumers, the feeder markets and mandi towns offer excellent scope for  distribut distribution. ion. The rural customers customers visit these towns at regular regular intervals intervals not only for selling 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.

•

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 48

respect of transactions, it is an attractive place to those who want to buy second hand durabl durables es and to those those who prefer prefer barter barter transa transacti ctions ons.. Furthe Furtherr the freshn freshness ess 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, durables, jewellery, jewellery, cattle, machinery, farming farming equipment, equipment, raw materials 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 a s per the essential commodities act. This is why there a re 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 cooperatives 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 Coimba Coimbator toree (T.N) (T.N) arrange arrangess free free transi transitt of rural rural consum consumers ers to the superm supermark arket et of their  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.

THE OLD SETUP

49

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

1. Whol holesale salerrs

The Indian wholesaler wholesaler is principally principally a Galla – Kirana Kirana (food-grai (food-grain) n) merchant merchant who sustains 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.

2. 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. Often doubling up as money lenders. Their multi – person interaction in the closed village society. 50

As a result retailers play a significant role.

I. CRE CREDIBI DIBILI LIT TY:  He enjoys the confidence of the villagers.  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 is seen seen as as a busi busine ness ssma man n with with pro profi fitt mott motto. o.

-

His view view poin points ts are are evaluat evaluated ed with with other other sourc sources es of info informa rmatio tion.) n.)

II. II. INFL INFLUE UENC NCE E LEAD LEADER ER::  His role as influence leader is indisputable. From tender twig of neem to

wash washin ing g powde powderr reta retail iler er test testim imony ony has been been vita vitall part part of the the produ product ct adoption process.  The role of urban retailer is weak.  The urban consumers have numerous sources of information.

Although gh retail retailer’ er’ss opinio opinion n is sought sought it may not be 100% believed believed and  Althou followed.

III. III. BRAN BRAND D PROM PROMOT OTER ER::  In rural market retailers remains the deciding factor to sell particular brand.

Retail iler erss help helpss in iden identi tifi fica cati tion on and sele select ctio ion n of bran brands ds,, ther theree is less less  Reta influence of shelf displays and point of purchase promotion.  Presence of spurious brands is an ample testimony to this view.

(- The urban retailer retailer has a limited limited role as a brand promoter. promoter. -

He cannot directly, recommend the brands.

-

He is is to intelligently drive home his his recommendations, as urban consumers do not trust him completely.

-

It is thro through ugh shel shelff displa displays ys and and incent incentive ive offer offerss that that he has to to push the the 51

 brands.)

IV. IV. RELA RELATI TION ONSH SHIP IP MAR MARKE KETE TER  R   Village retailer practices relationship marketing.

caters rs to a set set of buye buyers rs who who have have inco income me from from immo immovab vable le land land  He cate 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. (-

on the the contrar contrary, y, the the urban urban retail retailers ers have have to to make an an effort effort to to adopt adopt relationship marketing.

-

His cust custome omers rs base base compris comprises es large largely ly the the mobile mobile servic servicee class class prone 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.)

V. HARB HARBIN INGE GER R OF CHA CHANG NGE E  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.)

3. Vans

Mobile vans long since, have an important place in distribution and promotion of the products in villages. JK Dairy launched whitener ‘Dairy Top’ in small 50 gm sachets priced at Rs. 6.50. It decided to make a concerted foray into rural India in 1996. It hired vans to  penetrate the rural interior, each van traveling around 125 km a day, 25 days a month. 52

4. Wee Weekl kly y Haats, Haats, Baza Bazaar ars, s, Shand Shandies ies

The haats are the oldest outlets to purchase household goods and for trade. These markets are very well organized with shopkeepers having pre-assigned 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 Through the rural market marketss offer offer big attracti attractions ons to the market marketers ers,, one of the most most important questions frequently asked is “How do we reach the large rural population through different media and methods?

Mass Media Radio Cinema Press TV

Local Media Haats, Melas, Fairs Wall Paintings Hoardings Leaflets

Personalized Media Direct Communication Dealers Sales Persons Researchers

Video Vans Folk Media Animal Parade Transit Media



Formal media 53

It incl includ udes es Pres Presss and and prin print, t, TV, TV, Cine Cinema ma,, Radi Radio, o, and and Poin Pointt of purch purchas asee and Outdo Outdoor  or  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 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:

54

Radio reaches large population in rural areas at a relatively low cost. Example: Colgate, Jyot Jyotii Labs Labs,, Zand Zandu u Balm Balm,, Zuar Zuarii indus industr trie iess are are some some of the the comp compan anie iess usin using g radi radio o communication programme. There are specific programmes for farmers like Farm and Home/K Home/Kris rishi hi Darsha Darshan n in region regional al langua languages ges.. The farmer farmerss have a habit habit of listen listening ing 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 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.

55



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 their shops so that the shop will look better. Walls of farm houses, houses, shops and schools 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, slogan sloganss for catchi catching ng the attenti attention on of people people.. Compani Companies es market marketing ing TV, fans, fans, brande branded d coffee/tea, toothpaste, pesticides, fertilizers etc. use wall painting as promotion medium in rural areas.

56



Tree boards:

These are painted boards of about two square feet in dimension having the picture or name or  slogan of the product painted on it. The cost of such a painted board is about Rs.80. These  boards are fixed to the trees on both sides of the village road at a height of about 10 feet from ground level. These boards attract the attention of slow moving vehicles like cycles, bullock  carts and tractors and people walking on the road. Considering the poor condition of roads, even the buses move at slow speed through village village road. Fertilizer Fertilizer and pesticide companies companies in rural areas extensively use tree boards. These are low priced promotion items and can be used  by consumer goods companies too.



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 Rural people people prefer prefer face-t face-to-f o-face ace commun communica icatio tion n and farm farm visits visits facili facilitat tatee two-wa two-way y communication. The advantage is that the sales person can understand the needs and wants 57

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 securing orders orders.. Exampl Example: e: This This approa approach ch has been found found to be very very effect effective ive 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 banks,, agricu agricultu ltural ral inputs inputs and machin machinery ery compani companies es in rural rural areas. areas. The banker bankerss visit 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 wheelers also. Example: MRF Tyres conduct tractor owners meet in villages to discuss repairs and maintenance of tractors.



Opinion leaders:

Vill Villag ager erss plac placee more more emph emphas asis is on the the expe experi rien ence ce of othe others rs who who have have used 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 58

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 no t 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,  beliefs and perceptions of rural customers that influence his buying behaviour.



Folk dances:

These are well-apprec well-appreciated iated form of entertainm entertainment ent available available to the village people. The folk  dance dance “Kurav “Kuravan an Kurath Kurathi” i” is popular popular in Tamil Tamil Nadu. Nadu. The troupe troupe consist consistss of dancers 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 59

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 leaflets are distribute distributed. d. After the dance programme, programme, queries, if any, about the products 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. minutes. At the end of the film show, he distributes handbills and answers queries of the 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.

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

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: 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 inse insect ct pest pestss and and show showin ing g the the farm farmer er how how effe effect ctiv ivel ely y the the inse insect ctss are are cont contro roll lled ed.. b) Demonstrating the use of tractor/implements for different agricultural operations. c) Hawkins  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.

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Field days:

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These are extension extension of field field demonstrat demonstrations. ions. One of the main objectives objectives of following 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 They prov provid idee late latest st info inform rmat atio ion n on cult cultiv ivat atio ion n of crop crops, s, fert fertil iliz izer er appl applic icat atio ion, n, weed, weed, management and control of pests and diseases. Experienced agricultural graduates who make frequent visits to the field and advice advice farmer farmerss on modern modern agricu agricultu ltural ral practi practices ces manage manage the center centers. s. They also also provid providee informatio information n on farm implements, implements, seeds, fertilizers, fertilizers, pesticides pesticides,, diesel diesel engines, engines, sprayers 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 They includ includee villag villagee sport sports, s, religi religious ous events events,, promin prominent ent person personali alitie tiess and role role models models.. Examples: Textile mills maintaining community gardens, Mineral water companies supplying clean clean drinki drinking ng water water during during summer summer festiv festivals als in villag villages es and Consum Consumer er goods goods compani companies es sponsoring Kabaddi.

Choosing media vehicles

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The choice of different media vehicles for any market is based on an analysis of the standard featur features es like: like: reach, reach, freque frequency ncy,, cost cost & availa availabil bility ity.. Dependi Depending ng on the factor factor of reach reach & freq freque uency ncy,, the the diff differ eren entt medi mediaa can be clas classi sifi fied ed into into the the foll follow owin ing g cate catego gori ries es.. This This categorization can help the marketer to make a decision about which type of media would be more suitable to the product & the organization. (a) High High reach High High frequenc frequency y •

Jeep based advertising

•

Wall painting

•

Bus stand & bus panels

•

Haats

•

Hoardings

•

Postal branding

(b) Low reach reach High High frequency frequency •

Co-operative notice board

•

Shop front painting

•

Tin plating – house

•

Dealer boards

•

Village boards

•

Well tiles

•

Calendars/labels

(c) High High reach reach Low freque frequency ncy •

Van based advertising

•

Melas

•

Direct to home

•

Folklore group

•

Exhibitions/created events

(d) Low reach reach Low Low frequency frequency •

Tin painting – tree/shops

•

Leaflets

•

Posters & banners

•

Streamers 63

•

Danglers

Conclusion

Thus looking at the challenges and the opportunities which rural markets offer to the marketers it can be said that the future is very promising for those who can understand the dynamics of  64

rural rural market marketss and exploi exploitt them them to their their best best advanta advantage. ge. A radica radicall change change in attitu attitudes des of  mark market eter erss towa toward rdss the the vibr vibran antt and and burg burgeo eoni ning ng rura rurall mark market etss is call called ed for, for, so they they can can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India. The rural market is very large in compare to the urban market as well as it is more challenging market. The consumer wants those products which are long lasting, good, easy to use and cheaper. The income level of rural consumers is not as high as the income level of urban consumers that’s why they want low price goods. It is one of the reasons that the sell of sachet is much larger in the rural area in all segments. It is necessary for all the major companies to provide those products which are easy to available and affordable to the consumers. It is right that the profit margin is very low in the FMCG  products, but at the same time the market size is much large in the rural area. The companies can reduce their prices by cutting the costs on the packaging because the rural consumers don’t need attractive attractive packaging. Application Application of 4A* is also a major task for the major companies companies in this area. Rural market has an untapped potential like rain but it is different from the urban market so it requir requires es the differ different ent market marketing ing strate strategie giess and market marketer er has to meet meet the challe challenges nges to be successful in rural market.

References 1.

www.thehindubusinessline.com/nic/073/index.htm

2.

www.coolavenues.com/know/mktg/

3.

www.indianmba.com/Faculty_Column/FC658/fc658.html

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4.

business.mapsofindia.com/ rural -economy/state-economy/state-

development/ marketing  .html  marketing .html  5.

www.icmrindia.org/casestudies/catalogue/ Marketing/MKTG081.htm

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