Professional Documents
Culture Documents
Objectives
• Marketing mix challenges.
• Product concept and classification.
• New product development with adoption
process of consumers.
• Lifecycle of a product and Strategies in
rural packaging and after sales service.
Marketing mix challenges.
• Product – Acceptability
• Price- Affordability
• Place- Availability
• Promotion- Awareness
Availability
• First challenge- To ensure the availability
of product or services.
• 638000 villages spread over 3.3 million sq
km ; 742 million Indians may live in rural
areas but finding them is not easy.
• Poor state of roads – a greater challenge
to send products to far flung villages on a
regular basis.
• Solution strong distribution system.
• Example
• HLL’s strong distribution
system- uses auto-rickshaws ,
bullock carts and even boats in
the backwaters of Kerala.
• Coca-cola uses hub and spoke
model.
Affordability
• With low disposable incomes products need to
affordable to rural consumers.
• Most of them are daily wage earners.
• Some companies addressed the problem by
introducing small unit parks.
• Example includes
• Godrej – 3 brands of cinthol, fairglow and godrej
in 50gms pack prices rupees 4-5.
• HLL – lifebuoy at Rs 2 for 50 gm.
• Coca cola – Returnable 200 ml glass bottle at
Rs.5/-.
Acceptability
• Need to provide product that suit the rural
market.
• L.G.Electronics- Customized television
and christened it Sampoorna.
• Coca cola – low cost iceboxes, tin box for
new outlets and thrmocol box for seasonal
outlets because of lack of electricity and
absence of refrigerators.
Awareness
• Large parts inaccessible to conventional
media. Only 41 percent got access.
• Outing confined to local fairs and festivals
• Television viewing to state owned
channel- Doordarshan.
• HLL – relies on its own company
organised media.
• Godrej – uses radio to reach people in
their own language.
Products concepts and
classification
• Market mix planning begins with offering.
• Rural consumers judges offering on the
basis of three elements
1) Product features and quality.
2) Service mix and quality.
3) Appropriateness of offering’s price.
• Companies should not dump the
goods for urban consumers into rural
market.
• Understand the cultural dynamics
and specific needs.
• Cadbury launched Chocolate
flavored biscuit- mothers opt for
affordable rather than expensive.
• Eveready found plastic torches for
urban consumers have got no
demand in rural area they prefer
heavy brass torches – Importance of
product feature.
Five levels of product
• Each level adds more customer value and
constitute a scale of customer value
hierarchy.
• Five levels are core benefit, basic product,
expected product, augmented product,
and potential product.
• First two levels remains the same in both
urban and rural market. Difference from
the third level only.
• Third level- marketer prepares an
expected product and defines a set of
attributes and conditions that a consumer
normally expects .
• Rural television buyer expects good
picture quality, clear sound and easy to
operate set. Urban consumer goes for
digital sound, flat screen etc.
• Fourth level – marketer prepares an
augmented product that meets the
customers desires beyond expectations.
• This could be a television which runs on
batteries and better picture quality in weak
signal conditions also local languages etc.
• Where as for urban consumers this could
be an inbuilt DVD player with a television
etc.
• Fifth level – encompasses all
augmentations and transformations that
the product may ultimately undergo in
future. New ways to satisfy their
customers.
• Example electric bulbs that sustain high
voltage fluctuations.
Rural Product
Categories
•FMCG’s
•Consumer Durables
•Agri Goods
•Services
FMCG Main Players
FMCG Market
• According to NCAER survey, the rural
market accounted for 53% of the total
consumption in the country in 1998-99
• The estimated size was around
– Rs. 484 billion in 1998-99
– Rs. 650 billion in 2002
FMCG Growth
• Rural market has grown consistently in the 1990’s
• A spatial distribution of the FMCG rural market
shows that four states namely Uttar Pradesh,
Andhra Pradesh, Maharashtra and West Bengal
account for 50% share of this market
• High income households spends 3.6 times more
than the lower income households on FMCG’s.
FMCG Products
• About 50% of sale of soaps, detergents
and beverages, 37% of personal products
(shampoo, toothpaste and skin cream)
and 12% of food products comes from the
rural market.
Market Growth
• The average annual per capita spend on
FMCGs in rural is Rs. 9400 as compared
to Rs. 13000 for urban among rich
households.
• 70% of the population accounts for only
50% of even relatively well-penetrated
categories such as soaps and detergents.
Consumer Durables
• Durable goods include products like home
appliances, automobiles, watches,
funrniture.etc
Main Players
• NCAER has classified durables into 3
categories:
– Low priced(<Rs. 1000)
– Medium priced(Rs. 1000- 6000)
– High priced(>Rs. 6000)
Consumer Durables Market
• As per NCAER Indian Market
Demographics Report 2002, rural India
accounted for over 60% share of durables
in 1998-99.
• The estimated annual size of the rural
market is Rs. 130 billion
Rural Share
• The rural share of durables has risen from
54% in 1989-90 to over 60% in 1998-99.
• Number of durables with over 75% share
has increased from one to four products.
• For several high priced products, the rural
share continues to below 50%
Durable Products
• The rural penetration of most products is
very low compared to urban except for
bicycles, radios and mechanical wrist
watches.
• The rural-urban disparity is highest in case
of electrical goods.
Market Growth
• The mid 1990’s witnessed impressive
growth rates
• It increased from 8.8% in the mid 1990’s to
11.5% from 2000 onwards.
Agricultural Goods
• Agri products are goods that are used for
farm activities.
• The agri inputs market accounts for Rs.
450 billion annually.
• The major players are Rallis India,
Monsanto, DCM Shriram, Chambal
Fertilizers, IFFCO, Mahindra & Mahindra,
Eicher and Escorts
Services
• Major services in rural include
telecommunication, transport, health care,
banking, insurance and education, ITES
like the internet, DTP and mobile phone
services.
• This category is led my LIC, SBI, BSNL,
Reliance infocomm, ITC’s e-Choupal,
ICICI Prudential Life Insurance,etc.
New product development
1.Idea generation
2.Concept testing
3.Product development
4.Test marketing
e.g
• 5 k.g cooking gas cylinder by HPCL
• Jolly battery operated colour television
• Free power radio
• Jugad the rural public trans port in north
india
• Kishan credit card
Max gas cylinder
• Auto cut regulator
• Double-seated cylinder
• Special steel-braided hose pipe
• Wide base of cylinder
• Top ring open one side
EXAMPLE
• Mahindra maxx
• Hpcl,5-kg cylinder
• Vardhanm free bidi by Dalmia consumer
care
• Water purifier-jalshodhak
• Value added product: an aborted idea
• Phillips mahasangram
Product Life Cycle (PLC)
2. Spell-alikes
• Names are subtly and cleverly misspelt
• Eg: Paracute for Parachute
Pome’s for Pond’s
3. Duplicates
• Exact replicas of original brands
FEATURES DUPLICATES SPELL-ALIKES LOOKALIKES
• Suppliers
Initially competition in the rural market was on basis of price. But lately
competition is on non price factors. eg-anchor whites vegetarian toothpaste
• Legal environment
Pricing Strategies
• Optional-product pricing
• Captive-product pricing