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14426457 Rural Marketing

14426457 Rural Marketing

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A Seminar Report On “RURAL MARKETING” Submitted in the partial fulfillment of the award of PG Degree of Master of Busi ness Administration

Session 2008-09 Submitted To: Department of Management Studies, Submitted By:Ravi MBA 4th sem. (Marketing) Jaipur 1

Executive Summary A debate continued for a long time amongst the Indian marketers, both practition ers & academicians, on the justification for the existence of the distinct disci pline of rural marketing. Consequently, two schools of thought emerged. The firs t school belived that the products/services, marketing tools & strategies that a re successful in urban areas, could be transplanted with little or no more modif ications in rural areas. However, the second school saw a clear distinction betw een urban & rural India, & suggested a different approach, skills, tools & strat egies to be successful in rural markets. What differentiates the two markets is not mere income, but a host of other infrastructural & socio-cultural factors. T hus, the rural market cannot be tapped successfully with an urban marketing mind set & would definitely require its thorough understanding. In other words, the a pproach toward rural markets needs to be distinct from the one adopted for the u rban markets. Thus, in a large rural economy like India’s, rural marketing has e merged as an important & distinct internal sub-division within the marketing dis cipline. This sub-division clearly highlights the differences between rural mark eting & mainstream marketing. 2

Table of contents 1) Rural marketing 2) Evolution of rural marketing 3) Nature of rural market 4) Rural marketing transactional or developmental 5) Classification of rural consum ers 6) Roadblocks of Indian Rural Markets 7) Attractiveness of rural market 8) R ural Vs Urban Marketing 9) Rural consumer behavior 10) 4 A’s approach of Indian Rural Market 11) Rural marketing Mix 12) Marketing strategies to capture rural m arket 12.1.Product strategies 12.2.Pricing strategies 12.3.Promotion strategies 12.4.Distribution strategies 13) Media vehicles 13.1.Formal media 13.2.Informal/ rural specific media 13.3.Choosing media vehicles 14) Conclusion 15) References 44 45 46 53 54 57 64 65 66 3 4 8 9 11 12 14 19 22 25 28 37 42 3

Rural Marketing Rural marketing involves the process of developing, pricing, promoting, distribu ting rural specific product and a service leading to exchange between rural and urban market which satisfies consumer demand and also achieves organizational ob jectives. URBAN RURAL RURAL URBAN RURAL RURAL It is a two-way marketing process wherein the transactions can be: 1. Urban to R ural: 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 includ e: Pesticides, FMCG Products, Consumer durables, etc. 2. Rural to Urban: Transac tions in this category basically fall under agricultural marketing where a rural producer seeks to sell his produce in an urban market. An agent or a middleman plays a crucial role in the marketing process. The following are some of the imp ortant items sold from the rural to urban areas: seeds, fruits and vegetables, m ilk and related products, forest produce, spices, etc. 3. Rural to Rural: This i ncludes the activities that take place between two villages in close proximity t o each other. The transactions relate to the areas of expertise the particular v illage has. These include selling of agricultural tools, cattle, carts and other s to another village in its proximity. 4

Rural marketing requires the understanding of the complexities. Indian agricultu ral 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 pr oducts. The rural agricultural production and consumption process plays a predom inant role in developing the Indian economy. This has designed a new way for 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 aft er sales service. Rural marketing is different from agricultural marketing, whic h signifies marketing of rural products to the urban consumer or institutional m arkets. Rural marketing basically deals with delivering manufactured or processe d inputs or services to rural producers, the demand for which is basically a der ived outcome. Rural marketing scientists also term it as developmental marketing , as the process of rural marketing involves an urban to rural activity, which i n turn is characterised by various peculiarities in terms of nature of market, p roducts and processes. Rural marketing differs from agricultural or consumer pro ducts marketing in terms of the nature of transactions, which includes participa nts, products, modalities, norms and outcomes. The participants in case of Rural Marketing would also be different they include input manufacturers, dealers, fa rmers, opinion makers, government agencies and traders. Rural marketing needs to combine concerns for profit with a concern for the society, besides being title d 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 l ocal dealers and retailers. The market for input gets interlocked with other mar kets 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 desi gn and positioning, pricing, distribution and promotion. Companies need to under stand 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 h ave a strategic view of the rural markets so as to know and understand the marke ts well. In the context of rural marketing one has to understand the manipulatio n of marketing mix has to be properly 5

understood in terms of product usage. Product usage is central to price, distrib ution, promotion, branding, company image and more important farmer economics, t hus 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 Before Mid1960 (from independence to green II revolution) Mid- Si xties (Green revolution to Preliberalization III period) Mid- Nineties (Postlibe ralization period on 20th century) IV 21st century Developmental marketing Rural Marketing Consumables And Durables For Consumption & Production All products & services Urban & Rural Urban & Rural Urban & Rural Rural Marketing Of Agricultur al Inputs Agricultural Inputs Urban Rural Agricultural Marketing Agricultural Pr oduce Rural Urban FUNCTION MAJOR PRODUCTS SOURCE MARKET DESTINATION MARKET 1. Phase I ( from Independence to Green Revolution): 6

Before the advent of the Green revolution, the nature of rural market was altoge ther different. Rural marketing then referred to the marketing of rural products in rural & urban products. 2. Phase II (Green Revolution to Pre-liberalization period): During these times, due to the advent & spread of the Green Revolution, rural marketing represented marketing of agriculture inputs in rural markets & marketing of rural produce in urban areas. 3. Phase III (Post-liberalization per iod on 20th century): The third phase of rural marketing started after the liber alization of the Indian economy. In this period, rural marketing represented the emerging, distinct activity of attracting & serving rural markets to fulfill th e need & wants of rural households, peoples & their occupations. 4. Phase IV (21 st century): Learning from its rural marketing experiences after the independenc e, the corporate world has finally realized the quick-fix solutions & piecemeal approaches will deliver only limited results in the rural markets. And, if an or ganization 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 foc us 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 presentin g comprehensive & integrated solutions which might involve a set of interrelated products & services. Till recently, the focus of marketers in India was the urb an consumer and by large number specific efforts were made to reach the rural ma rkets. But now it is felt that with the tempo of development accelerating in rur al India, coupled with increase in purchasing power, because of scientific agric ulture, the changing life style and consumption pattern of villagers with increa se in education, social mobility, improved means of transportations and communic ation and other penetrations of mass media such as television and its various sa tellite channels have exposed rural India to the outside world and hence their o utlook to life has also changed. Because of all these factors, rural India in no w attracting more and more marketers. 7

Increase in competition, saturated urban markets, more and move new products dem anding urban customers, made the companies to think about new potential markets. Thus, Indian rural markets have caught the attention of many companies, adverti sers and multinational companies. According to a recent survey conducted by the National Council for Applied Economic 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 pow er remains unexploited and with the growing reach of the television, it is now q uite easy for the marketers to capture these markets. Rural marketing has become the latest mantra of most corporate. Companies like Hindustan Lever, Colgate Pa lmolive, Britannia and even Multinational Companies (MNCs) like Pepsi, Coca Cola , L.G., Philips, Cavin Kare are all eyeing rural markets to capture the large In dian market. Coming to the frame work of Rural Marketing, Rural Marketing broadl y involves reaching the rural customer, understanding their needs and wants, sup ply of goods and services to meet their requirements, carrying out after sales s ervice 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 scatt ered into a number of regions. There may be less number of shops available to ma rket products. Major Income of Rural consumers is from Agriculture: Rural Pros perity 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 rura l population lives below poverty line and has low 8

literacy rate, low per capital income, societal backwardness, low savings, etc. But the new tax structure, good monsoon, government regulation on pricing has cr eated disposable incomes. Today the rural customer spends money to get value and is aware of the happening around him. Traditional Outlook: Villages develop s lowly and have a traditional outlook. Change is a continuous process but most ru ral people accept change gradually. This is gradually changing due to literacy e specially in the youth who have begun to change the outlook in the villages. R ising literacy levels: It is documented that approximately 45% of rural Indians are literate. Hence awareness has increases and the farmers are well-informed ab out the world around them. They are also educating themselves on the new technol ogy around them and aspiring for a better lifestyle. Diverse socioeconomic bac kground: Due to dispersion of geographical areas and uneven land fertility, rura l people have disparate socioeconomic background, which ultimately affects the r ural market. Infrastructure Facilities: The infrastructure facilities like cem ented roads, warehouses, communication system, and financial facilities are inad equate in rural areas. Hence physical distribution is a challenge to marketers w ho have found innovative ways to market their products. Is rural marketing transactional or developmental in its approach? It is true, rural markets have become an attractive proposition for commercial b usiness organizations. The role of rural marketing as such is more developmental than transactional. It is more a process of delivering better standard of livin g and quality of life to the rural environment taking into consideration the pre vailing village milieu. 9

Transactional Vs Developmental: For better comprehension of this role let us dis tinguish development marketing and transactional marketing. Table brings out the differences in brief. Transactional Vs Development Marketing S.No. 1. Aspect Concept Transactional Consumer orientation, Marketing concept Development Society orientation, societal concept Catalytic and transformation a gent Social change Social innovations and communications Socio-cultural, economi c Government, voluntary agencies, corporate enterprises, benefactors Development projects/schemes/programs Beneficiaries and buyers Developmental Market develop ment Corporate Image Medium-Long Service-motive Ideological or Public policy 2. 3. 4. 5. 6. Role Focus Key task Nature of activity Participants Stimulating and conversional marketing Product-market fit Product innovations an d communications Commercial Corporate enterprises, Sellers 7. 8. 9. 10. Offer Target group Communication Goal Products and services Buyers Functional Profits Customer satisfaction Brand imag e Short-medium Profit-motive Business policy 11. 12. Time-Frame Motivation Model: The model of rural marketing represents a combination of the transactiona l and developmental approaches. • Rural marketing process is both a catalyst as well as an outcome of the general rural development process. Initiation and mana gement of social and economic change in the 10

rural sector is the core of the rural marketing process. It becomes in this proc ess both benefactor and beneficiary. • Innovation is the essence of marketing. I nnovative methods of social change for successful transformation of traditional society are virtual. Such a change narrows the rural-urban divide. • The process of transformation can be only evolutionary and not revolutionary. The growth of the rural market can be a planned evolutionary process based on strategic instr uments of change rather than constitute just short-term opportunities for commer cial gains. • The exposure of ruralites to a variety of marketing transactions d uring the change process puts them in the role of beneficiaries than of just `bu yers of modern inputs and infrastructural services. • Communication is the vita l element of rural marketing. It should serve to resolve social conflicts, encou rage cooperation and strengthen competitive spirit during interactions between r ural and urban as well as within rural areas. Another critical point for communi cation is the point of conversion of ruralite from an "induced beneficiary" to a n "autonomous buyer". Classification of rural consumers The rural consumers are classified into omic status: • The Affluent Group: They number. They have affordability but not eting firms to depend on. Wheat farmers radesh fall in this group. • The Middle Class: This is one of the largest segments for manufactured goods and is fast expanding. Farmers cultivating sugar cane in UP and Karnataka fall in t his category. 11


the following are cash rich form a demand in Punjab and

groups based on their econ farmers and a very few in base large enough for mark rice merchants of Andhra P

• 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 s uch schemes and may move towards the middleclass. The farmers of Bihar and Oriss a fall under this category. Roadblocks of Indian Rural Markets There are several roadblocks that make it difficult to progress in the rural mar ket. Marketers encounter a number of problems like dealing with physical distrib ution, logistics, proper and effective deployment of sales force and effective m arketing communication when they enter rural markets. The major problems are lis ted 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 str ategies 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 communicat ion. Print media has less utility compared to the other media of communication. 3. Low per capita income: Agriculture is the main source of income and hence spe nding capacity depends upon the agriculture produce. Demand may not be stable or regular. 4. Transportation and warehousing: Transportation is one of the bigges t challenges in rural markets. As far as road transportation is concerned, about 50% of Indian villages are connected by roads. However, the rest of the rural m arkets do not even have a proper road linkage which makes physical distribution a tough task. Many villages are located in hilly terrains that make it difficult to connect them through roads. Most marketers use tractors or bullock carts in rural areas to distribute their products. Warehousing is another major problem i n rural areas, as there is hardly any organized agency to look after the storage issue. The services rendered by central warehousing corporation and state wareh ousing corporations are limited only to urban and suburban areas. 5. Ineffective distribution channels: The distribution chain is not very well organized and re quires a large number of intermediaries, which in turn increases the cost and 12

creates administrative problems. Due to lack of proper infrastructure, manufactu rers 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 th e marketers. 6. Many languages and diversity in culture: Factors like cultural c ongruence, different behaviour and language of the respective areas make it diff icult to handle the customers. Traits among the sales force are required to matc h the various requirements of these specific areas. 7. Lack of communication sys tem: 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 fa cilities like telegraph and telecommunication systems etc. The literacy rate in the rural areas is rather low and consumer’s behaviour in these areas is traditi onal, which may be a problem for effective communication. 8. Spurious brands: Co st 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 d ifference due to illiteracy. 9. Seasonal demand: Demand may be seasonal due to d ependency on agricultural income. Harvest season might see an increase in dispos able income and hence more purchasing power. 10. Dispersed markets: Rural popula tion is highly dispersed and requires a lot of marketing efforts in terms of dis tribution and communication. Attractiveness of rural market 13

1 2 3 4 5 6 7 8 1. Large population Rising prosperity Growth in consumption Life cycle changes Life cycle advantages Market growth rate higher than urban Rural marketing is not ex pensive Remoteness is no longer a problem Large Population: The rural population is large and its growth rate is also high. Despite the rural urban migration, t he rural areas continue to be the place of living majority of Indians. 2. Rising Rural Propensity: 14

INCOME GROUP ABOVE RS. 100,000 RS. 77,001-100,000 RS. 50,001-77,000 RS. 25,001-5 0,000 RS.25,000 & BELOW 1994-95 1.6 2.7 8.3 26.0 61.4 2000-01 3.8 4.7 13.0 41.1 37.4 2006-07 5.6 5.8 22.4 44.6 20.2 Thus we see that population between income level of Rs. 25,000- 77,000 will incr ease from 34.3% in 1994-95 to 67.0% in 2006-07. The rural consuming class is inc reasing by about 3-4% per annum, which roughly translates into 1.2 million new c onsumers yearly. 3. Growth in consumption: PER CAPITA HOUSEHOLD EXPENDITURE (IS RS.) LEVEL NO. STATES Punjab Kerala Haryana Rajasthan Gujarat Andhra Pradesh Maharast ra West Bengal Orissa Tamil Naidu Uttar Pradesh Karnataka Assam Madhya Pradesh B ihar EXPENDITURE 614 604 546 452 416 386 384 382 381 381 373 365 338 326 289 High (Above Rs 382/-) 7 Average (Rs. 382/-) Low (Below Rs. 382/-) 5 3 Distribution household’s income wise (projection in Rs Crore) 2001 – 02 RURAL TO TAL NO. 0.26 0.07 12.04 5.7 7.73 5.09 2006 – 07 RURAL TOTAL NO. 0.52 0.12 16.72 3.68 10.3 2 3.52 INCOME GROUPS HIGH MIDDLE LOW % 2 6.9 6 4.2 8 % 23.1 61.8 95.7 15

TOTAL 18.04 12.8 9 8.7 7 1.4 20.90 13.9 6 66.7 Spending pattern (Rural Household’s in Rs.) ITEM FOOD ARTICLES TOILETRIES WASHIN G MATERIAL COSMETICS OTC PRODUCTS OTHERS TOTAL % RICH 4 147 4 2 67 0 1 43 3 1 33 0 4 13 9 30 333 POOR 73 33 22 17 6 15 166 AVERAGE 95 43 28 21 9 19 215 Average rural household spends on consumables excluding food grains, milk & vege tables are Rs. 215/-. 4. Life style changes: Income vs. usage of packed consumer goods (% of household using) 16

GOODS WASHING CAKES/BARS TOILET SOAPS TOOTH PASTE/POWDER TALCUM POWDER TEA (PACK AGED) 5. Life cycle advantage: STAGES IN LIFE CYCLE PRODUCT MONTHLY HOUSEHOLD INCOME (RS.) UP TO 350 351 – 751 – 1501 + 60 57 22 20 22 750 7 8 72 36 25 30 1500 86 89 65 41 48 91 93 85 63 64 URBAN MARKET GROWTH RURAL Growth Early growth Early growth Growth Growth RATE % Popular soaps Maturity 2 Premium soaps Late growth 11 Washing powder Late growth 6 Skin creams Maturity 1.1 Talcum powder Maturity 4 6. Market growth rates higher: Growth rates of the FMCG market and the durable market are higher in rural areas for many products. The rural market share will be more than 50% for the products like toilet soaps, body talcum powder, cooking medium (oil), cooking medium (vanaspati), tea, cigarettes and hair oil. 7. Rura l marketing is not expensive: Conventional wisdom dictates that since rural cons umers are dispersed, reaching them is costly. However, new research indicates th at the selling in Rural India is not expensive. According to one research it cos ts roughly Rs.1 Crore to promote a consumer durable inside a state. This include s the expenses of advertising in vernacular newspapers, television spots, in-cin ema advertising, radio, van operations and merchandising and point of purchase p romotion. Campaign like this, which can reach millions, costs twice as much in u rban area. 8. Remoteness is no longer a problem: Remoteness in a problem but not insurmountable. The rural distribution is not much developed for the reasons, 1 7

Lack of proper infrastructure such as all-weather roads, electrification and s anitation, and Lack of marketer’s imagination and initiative. Marketers have s o far, failed in analyzing the rural side and exploiting rural India’s tradition al 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 t o the potential of these two outlets. RURAL VS URBAN MARKETING-SUMMARY NO. 1 ASPECT URBAN Marketing & Societal Concepts & PHILOSOPHY Relationship Marke ting RURAL Marketing & Societal Concepts, Development Marketing & Relationship M arketing 2 A) MARKET 18

B) C) DEMAND COMPETITION High Among Units In Organized Sector Low Mostly From Unorganized Units Widely Spread Low Low Seasonal, Variation Low Level Slow Low Less Known Difficult Difficult To Grasp Moderate Very much Medium -low Village shops, “Haats” 3 4 5 CONSUMERS LOCATION LITERACY INCOME EXPENDITURE NEEDS INNOVATION/ADOPTION PRODUCT AWARENESS CONCEPT POSITIONING USAGE METHOD QUALITY PREFERENCE PRICE SENSITIVE LEVEL DESIRED DISTRIBUTION Concentrated High High Planned, Even High Level Faster High Known Easy Easily Gr asped Good Yes Medium-high Wholesalers, stockists, retailer, supermarket, CHANNELS specialty stores, & authorised showrooms Good High Print, audio visual Average L imited TV, radio, print media to some extent. More languages Occasionally Gifts, price discounts Less opportunities 6 TRANSPORT FACILITIES PRODUCT AVAILABILITY PROMOTION ADVERTISING media, outdoors, exhibitions etc. few languages Door-to-door, frequently Contest s, gifts, price discount Good opportunities 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 rura l transport vehicle. The product at 20-25 HP will be targeted at those who canno t 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 l ocal needs. It spent Rs. 21 Lacs to develop a set that would have on-screen disp lays in the vernacular languages of Hindi, Tamil and Bengali. The logic, rural c onsumers 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 IMI TATIONS. Imitations may result in two types of goods depending upon the purpose, commitment, and competence of imitator. A poor imitator will end up in producin g deceptive, spurious, fake, copycat products. He dupes the gullible customer by offering products having close resemblance with the original. In quality, it is poor cousin to the original. On the other hand, a poor imitator may even produc e an improved version of the original product. In this scenario the job of the M arketer 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 e njoy in the rural markets are that the Imitators who are in the villages are mak ing these and they are offering More Margins & Better credit Facilities. To solv e this problem the Marketer has to educate the consumer about his product and sh ow him the benefits of his products over the imitated ones. Need-Product Relatio nships and the changes happening in Rural India Needs Old Products New Products 20

Brushing Teeth Washing Vessels Transport Irrigation Hair Wash Neem sticks, Charcoal, Rocksalt, Husk Coconut fiber, Earthy materials, Brick Pow der, Ash Bullock Cart, Horses, Donkeys Wells, Canals, Water lifters, Wind Mills Shikakai powder, Retha, Besan Toothpaste, tooth powder Washing Powders, soaps and liquids Tractors, LCVs, Mope ds, Scooters, Motor cycles Bore-wells, Motors, Power Generators, Pump Sets Shamp oos and hair care soaps 21

Rural Consumer Behaviour Consumer Buyer Behaviour refers to the buying behaviour of final consumers - ind ividuals and households who buy goods and services for personal consumption. All of these final consumers combined make up the consumer market. The consumer mar ket 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 differ ences in their purchase decisions and the product use. Villagers react different ly 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 m arketing products to rural India. Thus, it is important to study the thought pro cess 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. Enviro nmental of the consumer - The environment or the surroundings, within which the consumer lives, has a very strong influence on the buyer behavior, egs. Electrif ication, water supply affects demand for durables. 2. Geographic influences - Th e geographic location in which the rural consumer is located also speaks about t he 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 w atches in the north while they sell more quartz watches down south. 3. Family – it is an important buying decision making organization in consumer markets. Fami ly size & the roles played by family members exercise considerable influence on the purchase decisions. Industry observers are increasingly realizing that at ti mes, 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 structu res, becomes an attractive proposition. 4. Economic factors – The quantum of inc ome & 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 rur al market are below poverty line & for large number of people, agriculture is th e primary occupation. More than 70% of the people are in small-scale agricultura l operation. These factors affect the purchase decision. 5. Place of purchase (6 0% 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 en d provides indicators to the company on the need for education and also for new product ideas. 7. Brand preference and loyalty (80% of sale is branded items in 16 product 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. Cultur e is the most basic element that shapes a person’s wants and behaviour. 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 a re: 1. Product (colour, size, design, and shape): There are many examples that s upport this point. a. For example, the Tata Sumo, which was launched in rural In dia in a white colour, was not well accepted. But however, when the same Sumo wa s re23

launched as Spacio (a different name) and in a bright yellow colour, with a larg er seating capacity and ability to transport good, the acceptance was higher. b. Another good example would be Philips audio systems. Urban India looks at techn ology with the viewpoint of ‘the smaller the better’. However, in rural India, t he viewpoint is totally opposite. That is the main reason for the large acceptan ce of big audio systems. Thus Philips makes audio systems, which are big in size and get accepted in rural India by their sheer size. 2. Social practices: There are so many different cultures, and each culture exhibits different social prac tices. For example, in a few villages they have common bath areas. Villagers use d 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. Decis ion-making by male head: The male in Indian culture has always been given the de signation 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 hous e 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 trac tors, VCR’s, LCV’s 24

4 A’s approach of Indian Rural Market The rural market may be appealing but it is not without its problems: Low per ca pita disposable incomes that is half the urban disposable income; large number o f 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 da ring 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 liv e in rural areas, finding them is not easy. However, given the poor state of roa ds, 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 wi th a population of more than 5,000. Marketers must trade off the distribution co st with incremental market saturation. Over the years, India s largest MNC, Hind ustan Lever, a subsidiary of Unilever, has built a strong distribution system wh ich helps its brands reach the interiors of the rural market. To service remote village, stockiest use autorickshaws, bullock-carts and even boats in the backwa ters 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 ensur e full loads, the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller di stributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semiurban market. To tap these unexpl ored country markets, LG has set up 45 area offices and 59 rural/remote area off ices. 25



»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, mo st of who are on daily wages. Some companies have addressed the affordability pr oblem by introducing small unit packs. Most of the shampoos are available in sma ller packs. Fair and lovely was launched in a smaller pack. Colgate toothpaste l aunched its smaller packs to cater to the travelling segment and the rural consu mers.Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh — the so-called Bimaru States. Hindustan Lever, among the first MNC’s to realize the potential of India s rural market, has launched a variant o f its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The move is mainly targeted at the rural market. Coca-Cola has addressed the affordability issue b y 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. C oca-Cola has also introduced Sunfill, a powdered soft-drink concentrate. The ins tant and ready-to-mix Sunfill is available in a single-serve sachet of 25 gm pri ced 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. Therefo re, there is a need to offer products that suit the rural market. One company wh ich has reaped rich dividends by doing so is LG Electronics. In 1998, it develop ed a customized TV for the rural market and christened it Sampoorna. It was a ru nway hit selling 100,000 sets in the very first year. Because of the lack of ele ctricity and refrigerators in the rural areas, Coca-Cola provides low-cost ice b oxes — a tin box for new outlets and thermocol box for seasonal outlets. The ins urance companies that have tailor-made products for the rural market have perfor med well. HDFC Standard LIFE topped private insurers by selling policies worth R s 3.5 crores in total premium. The company tied up with non-governmental organiz ations and offered reasonably-priced policies in the nature of group insurance c overs. 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 lik es 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 r ural consumer expressions differ from his urban counterpart. Outing for the form er is confined to local fairs and festivals and TV viewing is confined to the st ate-owned Doordarshan. Consumption of branded products is treated as a special t reat or luxury. »Awareness Brand awareness is another challenge. Fortunately, however, the rural consumer h as the same likes as the urban consumer — movies and music — and for both the ur ban and rural consumer, the family is the key unit of identity. However, the rur al 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 stat e-owned Doordarshan. Consumption of branded products is treated as a special tre at or indulgence. Hindustan Lever relies heavily on its own company-organized me dia. These are promotional events organized by stockiest. Godrej Consumer Produc ts, 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 sp end on advertising on Doordarshan, which alone reached 41 per cent of rural hous eholds. It has also used banners, posters and tapped all the local forms of ente rtainment. 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 Electroni cs uses vans and road shows to reach rural customers. The company uses local lan guage advertising. Philips India uses wall writing and radio advertising to driv e its growth in rural areas. The key dilemma for MNC’s ready to tap the large an d fast-growing rural market is whether they can do so without hurting the compan y s profit margins. 27




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 marke t is every marketer’s dream. However, myths abound. India’s rural markets are of ten misunderstood. A clear distinction needs to be made with regard to the reali ty versus the image of rural India. If such a distinction is not made, we will b e unable to distinguish between the serpent and the rope and the rope and the se rpent. The rural market is not homogeneous. Though the aggregate size is very la rge, individual subsets of this market tend to be rather small and disparate. Ge ographical, demographical, statistical, logistical differences are very apparent . Positioning and realities regarding the potential of each of these market segm ents differ and lie at the very core of forming the strategy for the rural marke ts. The face of Indian agriculture is changing from dry land and irrigated agric ulture into high-tech and low-tech agriculture. Farmers in states like Maharasht ra and Andhra Pradesh have reaped the benefits of adopting new age farming pract ices, including green house cultivation, fert-irrigation and hydroponics. This h as radically changed the economics of farming, with the investment in these syst ems lowering the cost of cultivation, increasing yields due to integrated crop m anagement practices and reducing the dependence on rainfall. As a result, dispos able income has grown sharply. The aspirants are becoming climbers showing a sus tained economic upturn as purchasing power is increasing in the rural markets. T he proportion of very rich has increased five- fold. The growing incomes have mo dified demand patterns and buyer behaviour. Moreover, the need for a product or service is now adequately backed up with the capacity, ability and willingness t o pay. However, the market still remains largely unexploited. At most times, pot ential markets need to be found and at times, even created. Such creation of dem and needs efficient management of the supply chain. To increase market share, be havioural change needs to be at the forefront of any strategy. Further, due to t he diversity of this market, marketers need to think, plan and act locally. It i s therefore essential to develop an accurate Marketing Mix for selling to rural Indians. 28

Product The Rural market is not a homogenous set of customers with preferences frozen in time. When developing products in any category, marketers must identify the typ ical rural specific needs. Urban products cannot be dumped onto rural markets wi thout modifications. Tailor-made products are better received by the rural audie nce as the consumers feel empowered and tend to dentify with the offering. For i nstance, 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 identi fy as strongly with these perfumes. Sachetization is also a distinctly rural-dri ven phenomenon. As demand in several categories is being created, intensity of u se is quite low. On average, rural folk would use a shampoo only once a week. Ha bits take time to change and making unit sachet packs affordable is the key to i nducing trial and purchase. Systematic, in-depth research that can help understa nd the depths of the mind of the villagers, their buying criteria, purchase patt erns and purchasing power are an essential input while developing rural specific products or services. A common error has been to launch a completely stripped d own version of the urban product in the rural market, with the objective of offe ring 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 r ecognized and for which the consumer is willing to pay (value-adding features). Product developers should 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 incr ease product acceptability. Product development is severely constrained by legis lation in the case of agricultural inputs like fertilizers, insecticides and pes ticides. In the case of fertilizers for instance, though levels of deficiency of nutrients have increased significantly over the past decade, no significant cha nges in formulations notified under the Fertilizer Control Order have taken plac e. This has severely restricted the availability of cost effective specialty fer tilizers of global standards to Indian farmers. Technological know-how for manuf acture of such fertilizers exists within the country. However, farmers using mod ern farming practices are unable to get an assured supply of such farm inputs du e to draconian legislation. A move to liberalize the sector could perhaps consid er 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 label led specifications. 29

This would be a major policy initiative that would give a huge impetus to innova tive product development in the farm sector. Product life cycles as are becoming shorter and these are having their impact on company life cycles. Thus for any company wishing to develop its product portfolio, allegiance to the classic Amer ican P-AL Principle of Partnership - Alliances - Linkages is a basis for surviva l. Pricing Every marketer must realize that the rural consumer is not a miser. He is not si mply looking for the cheapest product in every category. He understands and dema nds value for money in every purchase that he makes. Pricing therefore is a dire ct function of factors including cost-benefit advantage and opportunity cost. Pr icing offered to consumers should be for value offerings that are affordable. Pr ice sensitivity is extremely high and comparison with competitive prices is comm on. Consumers seem to create narrow psychological price bands in their minds for product groups and price elasticity beyond the extreme price points is very hig h. The perceived utility or value of the product or service is the ultimate deci sion making factor. It is certain however, that buying cheap is not the primary objective. Rather, i t is “buying smart”. A study revealed that the average rural consumer takes appr oximately 2 years to decide on buying a watch! He will not do so unless he is to tally convinced that he is getting value for Money. Impulse buys and purchases f or conspicuous consumption are also extremely few and far Between considering th e “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. H e has a cash flow problem. This is because the village folk receive funds only t wice a year. At these times, he is capable of making high volume purchases. At a ll times, however, the unit price is critical and so is the pack size. Because o f this, in the lean season when there is a cash flow crunch, marketers need to p rovide 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 d elivery. These barriers stem from the fact that rural markets vary immensely in terms of tastes, habits and preferences leading to different expectations of eve ry segment of the population. 30

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 m ost effective promotional tool that shapes purchase decisions of the rural popul ation. Demonstrations establish the credentials of any new technology used in de veloping the product. In today’s information era, it is very important for compa nies to wise-up on emerging technologies. It has in fact become a medium to attr act larger audiences for a product demonstration. Technology must be used to pre pare a database of customers and their requirements. The use of video using mobi le vans and even large screen video walls at events should be arranged. The clas sic conundrums of reach and coverage of the media are shattered. Several creativ e 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 populat ion cannot read or write. Alliances with cottage industries, dharmsalas, panchay ats, post offices and police stations for advertising have also helped immensely . More importantly, in rural India, experience has proved time and time again th at word of mouth is the key influencer. Intermediaries are the foundation to rur al distribution. If the intermediary understands and is constantly reminded abou t your product, then the end user will not be allowed to forget. The companies m ust reinforce this highly effective medium and use all their innovation and mone y tom develop more dramatic point of sale and point of contact material. This be comes all the more important when in rural India, more often than not, the overl ap between the product categories sold in a single outlet in tremendous. For ins tance, 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. I n such cases, the point at which the customer actually comes in contact with a p roduct may not be the point at which the sale is affected. The re-use capacity a nd colour of the container in which the product is packed is also a crucial fact or. In fact, reusable packaging is considered a major aid in promoting sales for products in the rural market. Consumer and Trade schemes that Incentivise Spend ing using discount coupons, off season discounts, free samples, etc. encourage s pending. Lucky draws and gift schemes are a major hit in most states. 31

The use of local idioms and colloquial expressions are an excellent way to strik e a rapport with the rural consumer and must be borne in mind when developing me dia 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 c ampaigns. Another unique feature of rural markets is that the Decision making pr ocess is collective. The persons involved in the purchase process - influencer, decider, buyer, one who pays can all be different. So marketers must address bra nd messages in their campaigns at several levels. Apart from regular household g oods, several agribusiness companies have also started providing gift schemes wi th offers for free jewellery that influences the ladies to pressure the farmers to purchase agricultural inputs from select companies. This promotion strategy t hus makes women influence purchase decisions that they would ordinarily not be i nvolved in. Youth power is becoming increasingly evident in villages. Rural yout h bring brand knowledge to the households. This has forced several companies to change the focus and positioning of their products and services towards this seg ment that is growing in absolute number and relative influence. There are other attributes in the promotion strategy which are explained as unde r: 1. Mass media: In the present world mass media is a powerful medium of commun ication. The following are the mass media generally used: Television. Cinema Rad io Print media: Handbills and Booklets, posters, stickers, banners, etc. 2. Pers onal selling and opinion leaders: In personal selling it is required that the po tential users are identified and awareness is created among them about the produ ct, its features, uses and benefits. This can be achieved only by personal selli ng 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 c onsulted by others and his advice is normally followed. The opinion leaders may be big landlords or politicians or progressive farmers. 32

3. Special campaigns: During crop harvest and marketing seasons it is beneficial to take up special promotion campaigns in rural areas. Tractor owners (tonee) c onducted 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 Navc hadi which lasts for 7 days in Meerut. The largest such mela is the Maha Kumbh M ela which is visited by an average of 12 crore people. There is however, a cavea t when an organization is considering using mela for marketing their products. I s the audience at this mela fit for promotion of the product at hand? What are t he psychographics of this audience? What is the motivational and behavioural imp etus 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 c oncept marketing and those that have high prices, such melas are not suitable pr omotion media. This is because the time and the mood of the people that visit th ese melas are not right to digest technical information or for making large purc hases. People come to melas to have a good time and are not reminded of such hig h technology or high priced products when they return home. In the words of Mr. Neville Gomes, Managing Director of Multimedia Aquarius, promotion at melas is l ike a “one night stand”. There will be no reminder later. Thus, a large amount o f qualitative judgment is indeed in planning promotions at melas by media planne rs. 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 ve ry different from a town or city, thus the general marketing theories can’t be a pplied 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 town ships 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 e fforts. Most of the times, the rural 33

retailers themselves go to the urban areas to procure these goods. Rural markets imply complex logistical challenges that show up as high distribution costs. Si gnificance of Distribution No matter how well devised a company’s product, prici ng or promotion strategy, the most crucial link in ensuring the success of rural marketing efforts is distribution. Distribution must be strengthened and this w ould raise investment cost barriers for new entrants. In Rural India, the select ion 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 appr oximately 3 million retail outlets. However, Urban India has only 4,000 towns wh ere these outlets are located. On the other hand, Rural India’s 3 million outlet s are located in 6.3 lakh villages. Thus, marketers are faced with the problem o f 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 d istribution of shops is the self-limiting factor in terms of servicing the rural distribution network. 34

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 impossi ble for an organization of any size. Rural wealth and demand is concentrated typ ically at satellite towns, district headquarters, assembly markets and such cent ral locations. Rural distribution has a rigid hierarchy of markets that make cha nnel decisions relatively structured. It is essential for rural marketing companies to understand this hierarchy. Rura l 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. Fo r durables where the outlay involved is typically large, the purchase would be m ade in an assembly market for reasons of choice and availability of adequate cas h flow. This is due to the fact that it is at assembly markets that auction yard s 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 the refore not necessary for a marketer of TV sets to take their distribution channe l 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 dist ributor must be present at assembly markets which are much smaller in number, mo re 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. 35



One in every five villages with a population of over 2000 has a haat. In village s 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 500 0 visitors. Considering that the average population of an Indian village is appr oximately 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 al l 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 subwholes alers buy from haats for their village stores. What is most attractive to market ers 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 ar ea of a village, everybody knows everybody. Considering that over 5000 visit a h aat from 5 villages, the system gets derelationalised. Apart from the 90% cash s ale, 5 to 7% is conducted on barter system and the rest 3 to 5% is on credit. Al so attractive to companies wishing to use the system is the low selling overhead s. Participation fees at haats are a flat Re.1 to Rs.5 per stall and this rate i s common to a giant like Hindustan Lever and the smallest local seller. Distribu tion costs must be reduced through optimum utilization of the network. Thus, inc orporating 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 transactiona l marketing to relationship marketing is most evident in the village market. A s trong bond needs to be created with every consumer even in the remotest village and the smallest town. Marketing in Rural India is undoubtedly a long-haul exerc ise 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 i s 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 her e.



SEGMENTATION OF RURAL MARKET The first step is to develop & implement any stra tegy for the rural market should include the appropriate segmentation of the rur al market. The important thing is that appropriate segmentation basis need to be applied. Different product categories have different rural markets to cater to & these can be selected by applying different criteria of segmentation. The orga nization 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 cr ucial. The perception of the Indian about the desired product is changing. Now t hey 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 perc eption, 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 lang uage for promoting their products. They have started selling the concept of qual ity with proper communication. Their main focus is to change the Indian customer outlook about quality. With their promotion, rural customer started asking for value for money. BY TARGET CHANGING PERCEPTION 37

If one go to villages they will see that villagers using Toothpaste, even when t hey can use Neem or Babool sticks or Gudakhu, villagers are using soaps like Nim a rose, Breeze, Cinthol etc. even when they can use locally manufactured very lo w priced soaps. Villagers are constantly looking forward for new branded product s. What can one infer from these incidents, is the paradigm changing and custome r 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 prod uct 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 hol d on the people. Cultural values play major role in deciding what to buy. Moreov er, rural people are emotional and sensitive. Thus, to promote their brands, the y are exploiting social and cultural values. BY PROVIDING WHAT CUSTOMER WANT The customers want value for money. They do not see any value in frills associat ed with the products. They aim for the basic functionality. However, if the sell er provides frills free of cost they are happy with that. They are happy with su ch a high technology that can fulfil their need. As "Motorola" has launched, sev en 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 38

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 themselve s with India. With this, they influence Indian mindset. LG has launched a campai gn "LG ki Dua, all the best". ITC is promoting Indian cricket team for years; du ring world cup they have launched a campaign "Jeeta hai jitega apna Hindustan In dia 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 Indi an 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 lik e Daewoo based their advertisements on a normal Indian family. BY DEVELOPING RURAL-SPECIFIC PRODUCTS Many companies are developing rural-specific products. Keeping into consideratio n the requirements, a firm develops these products. Electrolux is working on a m ade-for India fridge designed to serve basic purposes: chill drinking water, kee p cooked food fresh, and 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 "Sampoo rna" for its newly launched TV. The word is a part of the Bengali, Hindi, Marath i 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 re putation 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 dist ribution channel. As well as trust of people, as people believe these brands. Si milarly Coke has acquired Thumps up, Gold Spot, Citra and Limca so that they can kill these brands, but later on they realized that to survive in the market and to compete with their competitor they have to rejuvenate these brands. BY EFFECTIVE MEDIA COMMUNICATION Media Rural marketing is being used by companies. They can either go for the tra ditional media or the modern media. The traditional media include melas, puppetr y, folk theatre etc. while the modern media includes TV, radio, and e-chaupal. L IC uses puppets to educate rural masses about its insurance policies. Govt of In dia uses puppetry in its campaigns to press ahead social issues. Brook Bond Lipt on India ltd used magicians electively for launch of Kadak Chap Tea in Etawah di strict. In between such a show, the lights are switched of and a torch is flashe d in the dark (EVEREADYs tact). BY ADOPTING LOCALISED WAY OF DISTRIBUTING Proper distribution channels are recognized by companies. The distribution chann el could be big scale Super markets; they thought that a similar system can be g rown in India. However, they were wrong; soon they realized that to succeed in I ndia they have to reach the nook and the corner of the country. They have to rea ch the "local Paan wala, Local Baniya" only they can succeed. MNC shoe giants, A didas, 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 ha ve 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 Instrum ents Ltd. a JV of Gillette and Luxor has launched 500 "Gajgamini" ranges of Park er Sonnet Hussain special edition fountain pens, priced at Rs. 5000. This pen is signed by Mr. Makbul Fida Hussain a renowned painter who has created "Gajgamini " range of paintings. Companies are promoting players like Bhaichung Bhutia, who is promoted by Reebok, so that they can associate their name with players like him and get popularity. MELAS Melas are places where villagers gather once in a while for shopping. Companies take advantage of such events to market their products. Dabur uses these events to sell products like JANAM GHUTI (Gripe water). NCAER estimates that around hal f 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 p roducts through paintings. 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 t he rural consumers, small unit packages stand a good chance of acceptance in rur al market. Single serve packets or sachets are enormously popular in India. They allow consumers to buy only what they need, experiment with new products, & con serve cash at the same time. This method has been tested by products life shampo os, pickles, biscuits, Vicks cough drops in single tablets, tooth paste, etc. Sm all 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 R ed Label Rs. 3.00 pack has more sales as compared to the large pack. This is bec ause it is very affordable for the lower income group with the deepest market re ach 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 design s: 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 fl uctuations. Thus, all these environmental factors must be considered while devel oping the products meant for rural audience. Nokia’s 1100 model is a very good e xample 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 als o 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 produ ct is an important factor for rural consumers. The product should be sturdy enou gh to stand rough handling, transportation & storage. The experience of torch li ght dry battery cell manufacturers supports this because the rural consumers pre ferred dry battery cells which are heavier than the lighter ones. For them, heav ier weight meant that it has more over and durability. Sturdiness of a product e ither or appearance is an important for the rural consumers. 42

4. Utility oriented products: The rural consumers are more concerned with utility o f the product and its appearance Philips India Ltd. Developed and introduced a low cos t medium wave receiver named BAHADUR during the early seventies. Initially the s ales 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 ent ertainment. 5. Brand name: For identification, the rural consumers do give their own brand name on the name of an item. The fertilizers companies normally use a logo on the fertilizer bags though fertilizers have to be sold only on generic names. A brand name or a logo is very important for a rural consumer for it can be easily remembered. Many a time’s rural consumers ask for peeli tikki in case of conventional and detergent washing soap. Nirma made a peeli tikki especially for those peeli tikki users who might have experienced better cleanliness with t he yellow colored bar as compared to the blue one although the actual difference is only of the color. e.g.: Coca-Cola targeted the whole Indian rural market wi th the positioning of “Thanda Matlab Coca-Cola” advertisements because most of t he 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 c an 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 manufac turing and marketing concerns. 2. Refill packs / Reusable packaging: In urban ar eas most of the health drinks are available. The containers can be put to multip urpose uses. Such measures can a significant impact in the rural market. For exa mple, the rural people can efficiently reuse the plastic bottle of hair oil. Sim ilarly 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 val ue engineering: in food industry, Soya protein is being used instead of milk pro tein. 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 produc t, so that a larger segment can afford it, thus, expanding the market. 4. Large volume-low margins (Rapid or slow penetration strategy): Marketers have to focus on generating large volumes & not big profit margins on individual products. If they price their product at a level which can lead to good volumes, then they c an 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 ben efits to the customers to further increase the turnover. Most often, it has been observed that advertising has less to do with product sales in the rural areas. If an organization gets the price point right, then it can work in rural market . 6. Low volume-low price strategy: This strategy of reducing prices by reducing the package size in order to make it appear more affordable, is delivering very good results for a large number of FMCG product categories, in the rural market s of India. In categories where maintaining the price point is extremely critica l, this strategy is delivering very good results. 7. Ensuring price compliance: Rural retailers, most of the times, charges more than the MRP. The manufacture h as 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 organization s to effectively target the rural market. The following strategies can be consid ered while developing promotional campaigns for the rural markets: 1. Think Glob al Act Local Rural population is diverse, but the commonalities of their ethos & simple living habits need to be understood for advertising to succeed. For that , the theme of the advertisement needs to revolve among universal themes, such a s family-love. But the context, storyline, language & idioms should be such that the rural audience of different rural market segments can relate to. 2. Think i n Local Idiom This is the need of the advertising professionals who can think li ke the rural people. The only we can have insights like ‘Thanda matlab Coca Cola ’. There should be the use of language writers who understands the rural & regio nal pulse better. 3. Simplicity & Clarity All promotional messages targeted at r ural 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 f ew propositions at a time. Bombarding rural consumers with too much, in less tim e can easily confuse them & leave them bewildered. Promotional message should hi ghlight only the functional values of the product & explains how those values ca n make the consumer’s life even better & solve any of his problems. 4. Narrative Story Style The promotional message can be delivered in the form of an entertai ning 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 s olve the problems of the rural consumers. 5. Choice of Brand Ambassador 45

Brand Ambassador for the rural markets need to be picked carefully as urban succ esses 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 t hat it had little impact on the rural consumer. DISTRIBUTION STRATEGY Many companies view the rural markets as great opportunity for expanding their s ales but find distribution as a major problem. Unfortunately, it is almost impos sible to transplant strategies which work successfully in urban markets onto rur al markets, namely, extensive retailing and sustained pull generation through ma ss 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 o utlets Lack of mass media infrastructure. The marketers were of the opinion that the villagers would come to nearby towns and buy the products that they want. What has been found is that if we have to s erve the rural consumer we will have to take our products to him through the cha nnels that he is using and some innovative ways of getting to him. The following distribution strategies formulated for the rural category. 46

1. Coverage of villages with 2000 and above population: Ideally, coverage of vil lages with up to 2000 and above population could be the break-even point for a d istribution setup. By doing so the percentage of villages covered comes to only 10% of all the villages, but the rural population covered will be substantial, t o the extent of about 40 to 45 percent. With a distribution network in about 55, 000 villages, which have a population of 2000 persons & above each, one can cove r about 25 crores rural consumers. This strategy is good to begin with & then su bsequently, 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 vi llages 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 operati ng in rural areas for different purposes like marketing cooperatives, farmer’s s ervice cooperatives and other multipurpose cooperatives. These cooperatives have an arrangement for centralized procurement and distribution through their respe ctive state level federation. Such state level federation can be motivated to pr ocure and distribute consumables items and low value durable items to the member s to the society for serving to the rural consumers. Many of the societies exten d credit to the members for purchases. 4. Utilization of public distributory sys tem: The PDS in the country is fairly well organized. The revamped PDS places mo re emphasis on reaching remote rural areas like the hills and tribal’s. The purp ose of PDS is to make available essential commodities like food grains, sugar, k erosene, edible oils and others to the consumers at a reasonable price. The shop s 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 e ntrepreneurs. Here again there is an arrangement for centralized procurement and distribution. The manufacturing and marketing men should explore effective util ization 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 agri cultural inputs like fertilizers, pesticides and seeds. It is estimated that the re are about 450 such outlets in operation in the country. The rural consumer wh o 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 als o. 6. Distribution up to feeder markets/mandi towns: Keeping in view the hierarc hy of markets for the rural consumers, the feeder markets and mandi towns offer excell ent scope for distribution. The rural customers visit these towns at regular int ervals not only for selling the agricultural produce but also for purchasing clo th, jewelry, hardware, radios, torch cells and other durables and consumer produ cts. From the feeder markets and mandi towns the stockiest or wholesaler can arr ange for distribution to the village shops in the interior places. This distribu tion can be done by mopeds, cycles, bullock-carts, camelbacks etc. depending upo n the township. 7. Shandies/Haaths/Jathras/Melas: These are places where the rur al consumers congregate as a rule. While shandies/heaths are held a particular d ay every week, Jathras and melas are held once or twice a year for longer durati ons. They are normally timed with religious festivals. Such places attract large number of itinerant merchants. Only temporary shops come up selling goods of al l kinds. It can be beneficial for companies to organize sales of their product a t 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 ne cessary. It is estimated that over 5,000 fairs are held in the country and the e stimated attendance is about 100 million rural consumers. Biggest fair ‘Pushkar Mela’ is estimated to attract over 10 million people. There are 50 such big rura l fairs held in various parts of country, which attract urbanite also like ‘Mank anavillaku’ in Malappara in Kerela, Kumbh Mela at Hardwar in U.P. ‘Periya Kirthi gai’ 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 consume rs immense choice and prices. • Attractive: The weekend shopping is not only con venient 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 seco nd hand durables and to those who prefer barter transactions. Further the freshn ess of the produce, buying in bulk for, a week and the bargaining advantage attr act the frugal and weeklong hard working rural folk. • Availability: It is a mar ket for everyone and for everything. Household goods, clothes, durables, jewelle ry, cattle, machinery, farming equipment, raw materials and a host of products a re available. 8. Agricultural Input Dealers: Fertilizers should be made available to the farme rs within the range of 4-5 km from their residence, as per the essential commodi ties act. This is why there are about 2 lakh fertilizer dealers in the country, both in cooperative & private sector. Example of Varana Nagar in Maharashtra pro ved an eye opener in this regard where the sugar and milk cooperatives have tota lly changed the life style of people. The supermarket in Varana Nagar caters exc lusively to rural consumers. Similarly a co-operative supermarket called ‘Chinta mani’ in Coimbatore (T.N) arranges free transit of rural consumers to the superm arket of their purchases. 9. Joint distribution by Non-competing Companies: As t he cost of distributing the products in the rural market through distribution va ns can be unviable for a single company, different non-competing companies can c ome together to jointly operate distribution vans for the rural market. This wil l 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 financia lly viable for all the players. 10. Personal Selling Network: It is very success ful distribution channel being developed by companies like HUL. It adds a person al touch to the marketing, as the salesmen are the resident of the village or co mmunity itself, making it easier to sell the product & maximise sales for the co mpany. THE OLD SETUP 49

The historically available people & places for distribution include: - Whole sel ler, Retailer, Vans, Weekly Haats, and Bazaars & Shadies. 1. Wholesalers The Ind ian wholesaler is principally a Galla – Kirana (food-grain) merchant who sustain s the belief that business is speculative rather than distributive in character. He is a trader / commodity merchant rather than a distributor and therefore ten ds to support a brand during boom and withdraw support during slump. The reason for this speculative character and dormant role of wholesalers are: • • Indian m arket 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 a s a distributor of products to rural retail outlets and build his loyalties to t he 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 a mong the most mobile of rural residents. Often doubling up as money lenders. The ir multi – person interaction in the closed village society. 50

As a result retailers play a significant role. I. CREDIBILITY: He enjoys the c onfidence of the villagers. His views are accepted and followed by the rural p eople whose awareness and media exposure levels are low. (The urban retailer is not trusted. He is seen as a businessman with profit motto. His view points are evaluated with other sources of information.) II. INFLUENCE LEADER: His role as influence leader is indisputable. From tende r twig of neem to washing powder retailer testimony has been vital part of the p roduct adoption process. The role of urban retailer is weak. The urban consu mers have numerous sources of information. Although retailer’s opinion is soug ht it may not be 100% believed and followed. III. BRAND PROMOTER: In rural mar ket retailers remains the deciding factor to sell particular brand. Retailers helps in identification and selection of brands, there is less influence of shel f displays and point of purchase promotion. Presence of spurious brands is an ample testimony to this view. (- The urban retailer has a limited role as a bran d promoter. He cannot directly, recommend the brands. He is to intelligently dri ve home his recommendations, as urban consumers do not trust him completely. It is through shelf displays and incentive offers that he has to push the 51

brands.) IV. RELATIONSHIP MARKETER Village retailer practices relationship mar keting. He caters to a set of buyers who have income from immovable land resou rces and would be static over a much longer time span. The relationship could extend beyond three generations, backed by historical credibility of the retaile r as a product referral. (on the contrary, the urban retailers have to make an e ffort to adopt relationship marketing. His customers base comprises largely the mobile service class prone to shift residence at least once, if not more, in les s than a decade. This limits the time span and perspective of the retailer – cus tomer relationship.) V. HARBINGER OF CHANGE In an environment relatively isola ted 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 s ervices. (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 prom otion of the products in villages. JK Dairy launched whitener ‘Dairy Top’ in sma ll 50 gm sachets priced at Rs. 6.50. It decided to make a concerted foray into r ural India in 1996. It hired vans to penetrate the rural interior, each van trav eling around 125 km a day, 25 days a month. 52

4. Weekly Haats, Bazaars, Shandies The haats are the oldest outlets to purchase household goods and for trade. These markets are very well organized with shopke epers 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 loca tion 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 a re, in all, about 47,000 haats held throughout the country. Media Vehicles Through the rural markets offer big attractions to the marketers, one of the mos t important questions frequently asked is “How do we reach the large rural popul ation through different media and methods? Mass Media Radio Cinema Press TV Loca l Media Haats, Melas, Fairs Wall Paintings Hoardings Leaflets Video Vans Folk Me dia Animal Parade Transit Media Personalized Media Direct Communication Dealers Sales Persons Researchers Formal media 53

It includes Press and print, TV, Cinema, Radio, and Point of purchase and Outdoo r advertisement. Reach of formal media is low in rural households (Print: 18%, T V: 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. How ever local language newspapers and magazines are becoming popular among educated facilities in rural areas. Examples: Newspapers: Eenadu in A.P., Dina Thanthi i n Tamil Nadu, Punjab Kesari in the North, Loksatta in Maharashtra and Tamil maga zine Kumudam are very popular in rural areas. Television: It has made a great impact and large audience has been exposed to this medium. H LL 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 ver y 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 us ing these TV channels to reach the rural customer. Radio: 54

Radio reaches large population in rural areas at a relatively low cost. Example: Colgate, Jyoti Labs, Zandu Balm, Zuari industries are some of the companies usi ng radio communication programme. There are specific programmes for farmers like Farm and Home/Krishi Darshan in regional languages. The farmers have a habit of listening to regional news/agricultural news in the morning and the late evenin g. 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 o f 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 habit s is high in certain states like Tamil Nadu, Karnataka and Andhra Pradesh. Villa ge theatres do roaring business during festivals by having four shows per day. T he 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 t his activity. Examples: Films on products like Vicks, Lifebuoy and SPIC fertiliz ers are shown in rural cinema halls. Apart from films, Ad slides can also be scr eened in village theatres. Outdoor advertisements: This form of media, which includes signboards, wall painting, hoarding, tree boa rds, 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 rur al 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 atte ntion of prospective buyers. However a clutter of such POP materials of competin g 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, di rectly to potential customers through the medium of post. It is a medium employe d 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 wher eas 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 th eir shops so that the shop will look better. Walls of farm houses, shops and sch ools 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 dur ing election time and rainy season. The matter should be in the form of pictures , slogans for catching the attention of people. Companies marketing TV, fans, br anded 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 pictur e or name or slogan of the product painted on it. The cost of such a painted boa rd is about Rs.80. These boards are fixed to the trees on both sides of the vill age road at a height of about 10 feet from ground level. These boards attract th e 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 bu ses move at slow speed through village road. Fertilizer and pesticide 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 rea lizing the promotional objectives. Companies to suit the specific requirements o f rural communication are using a variety of such media effectively and some of the more important media and methods are given below. Farm-to-Farm/House-to-House visit: Rural people prefer face-to-face communication and farm visits facilitate two-wa 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 la nguage and also samples of products. The person does not sell the product but on ly promotes the use of the product. Very often the local dealer also joins the r epresentative in making farm-to-farm visits. The dealer clarifies the terms and conditions of sale and also makes independent follow up visits for securing orde rs. Example: This approach has been found to be very effective for agricultural machinery, animal health products and agricultural inputs. Many LIC agents and c ompanies dealing with high value consumer durables have tried this method with s uccess 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 benefi ts of the products to a large number of customers through such meetings. Group m eeting of key customers are conducted by banks, agricultural inputs and machiner y companies in rural areas. The bankers visit an identified village, get the vil lage people in a common place and explain the various schemes to the villagers. Such meetings could be organized in prosperous villages for promoting consumer d urables and two wheelers also. Example: MRF Tyres conduct tractor owners meet in villages to discuss repairs and maintenance of tractors. Opinion leaders: Villagers place more emphasis on the experience of others who have used a produc t/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 follow ed. Such opinion 58

leaders could be big landlords, bank official, panchayath-president, teachers, e xtension workers etc. Examples: a) Mahindra Tractors use bankers as opinion lead ers for their product. b) Asian Paints promoted its Utsav brand of paint by pain ting the village Sarpanch’s house a few months prior to the launch if the branch to demonstrate that the paint does not peel off. The Melas: Melas are of diff erent types i.e. commodity fairs, cattle fairs and religious fairs and may be he ld only for a day or may extend over a week. Many companies have come out with c reative ideas for participating in such melas. Examples: a) Britannia promotes T iger 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 Lifebu oy. Handcarts have been deployed for increasing access. The Haats: Traditionally on certain days of week, both the sellers and buyers meet in the v illage to buy and sell goods and services. These are the haats that are being he ld regularly in all rural areas. The sellers arrive in the morning in the haat a nd remain till late in the evening. Next day they move to another haat. The reas on being that in villages the wages are paid on weekly basis and haat is conduct ed 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 h aats 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 in fluence his buying behaviour. Folk dances: These are well-appreciated form of entertainment available to the village people . The folk dance “Kuravan Kurathi” is popular in Tamil Nadu. The troupe consists of dancers, drummers and musicians and they move in a well-decorated van from o ne village to another village singing and dancing. In a day the troupe covers ab out 8-10 villages. As soon as the 59

van reaches a village, film songs are played to attract the attention of the vil lages. This is followed by folk dances. Mike announcement is made about the comp any’s products and leaflets are distributed. After the dance programme, queries, if any, about the products are answered by the sales person. Folk dance program me costs about Rs.5000 per day and therefore these programmes are conducted duri ng the peak season in selected villages. Examples: Fertilizer and pesticide comp anies organize folk dance programmes during peak season in selected markets. Thu mps 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 mobi le promotion station having facilities for screening films slides and mike publi city. The sales person makes a brief talk about situation in the village, the pr oducts and the benefits. The ad film is screened along with some popular film sh ots and this continues for about 30 minutes. At the end of the film show, he dis tributes handbills and answers queries of the customers. The whole operation tak es about 1-2 hours depending upon the products under promotion, number of partic ipants 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 u nit is about Rs.4000 per day and AVP van operation has to be considered as an in vestment for business development in rural areas. Example: Companies such as HLL , Colgate, and Phillips have made effective use of AVP vans for popularizing the ir products in rural areas. 60

Product display contests: Package is an integral part of the product. Its main purpose is to protect the p roduct 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. Th e 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 abou t a month. A wellplanned product display contest not only increases the involvem ent 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, soa ps and toothpaste. Field demonstration: This is based on the extension principle “seeing is believing” and is one of the most effective methods to show the superiority of the company’s products to the customers. A progressive farmer who is an opinion leader is selected and the de monstration is conducted in his field in the presence of a group of farmers in t he village. The farmers observe the results in the field and the local dealer ca lls on them in their farms and persuades them to buy the particular brand of pes ticide or fertilizer. Examples: a) Spraying a particular brand of an insecticide against insect pests and showing the farmer how effectively the insects are con trolled. b) Demonstrating the use of tractor/implements for different agricultur al operations. c) Hawkins pressure cooker has demonstration representatives who carry out demos in rural households. The representative receives 1% commission f or every customer who approaches the dealer via demonstrations. e) Similarly eff ectiveness of detergents, pressure cookers, vaccum cleaners and mosquito coils c ould be promoted by demonstrations in selected markets. Field days: 61

These are extension of field demonstrations. One of the main objectives of follo wing modern agricultural practices is to increase the yield. The company organiz es demonstrations in a piece of land belonging to progressive farmers. All the f ertilizers, pesticides, nutrients etc. are applied after making field observatio ns. Just before harvest, all the important farmers are invited to see demonstrat ion plot and see for themselves how the yields are better in the plot compared t o other fields. Field demonstrations/field days consume lot of time and efforts and therefore have to be planned well. Information centers: They provide latest information on cultivation of crops, fertilizer application, weed, management and control of pests and diseases. Experienced agricultural gr aduates who make frequent visits to the field and advice farmers on modern agric ultural practices manage the centers. They also provide information on farm impl ements, seeds, fertilizers, pesticides, diesel engines, sprayers and tractors et c. Many consumer goods companies have opened show rooms in prosperous rural area s. Example: Hero Honda has opened extension counters with show room facilities i n major rural markets. Life-style marketing: Each rural market segment has certain special features i.e. they share common li fe-style traits. They include village sports, religious events, prominent person alities and role models. Examples: Textile mills maintaining community gardens, Mineral water companies supplying clean drinking water during summer festivals i n villages and Consumer goods companies sponsoring Kabaddi. Choosing media vehicles 62

The choice of different media vehicles for any market is based on an analysis of the standard features like: reach, frequency, cost & availability. Depending on the factor of reach & frequency, the different media can be classified into the following categories. This categorization can help the marketer to make a decis ion about which type of media would be more suitable to the product & the organi zation. (a) High reach High frequency • • • • • • • • • • • • • • • • • • • • • Jeep based advertising Wall painting Bus stand & bus panels Haats Hoardings Post al branding (b) Low reach High frequency Co-operative notice board Shop front painting Tin p lating – house Dealer boards Village boards Well tiles Calendars/labels (c) High reach Low frequency Van based advertising Melas Direct to home Folklore group Exhibitions/created events (d) Low reach Low frequency Tin painting – tree/shops Leaflets Posters & banners 63

• • Streamers Danglers Conclusion 64

Thus looking at the challenges and the opportunities which rural markets offer t o the marketers it can be said that the future is very promising for those who c an understand the dynamics of rural markets and exploit them to their best advan tage. A radical change in attitudes of marketers towards the vibrant and burgeon ing rural markets is called for, so they can successfully impress on the 230 mil lion 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 we ll 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 consumer s 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 consume rs. 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 con sumers don’t need attractive packaging. Application of 4A* is also a major task for the major companies in this area. Rural market has an untapped potential lik e rain but it is different from the urban market so it requires the different ma rketing strategies and marketer has to meet the challenges to be successful in r ural market. References 1. www.thehindubusinessline.com/nic/073/index.htm 2. www.coolavenues.com/know/mk tg/ 65

3. www.indianmba.com/Faculty_Column/FC658/fc658.html 4. business.mapsofindia.com /rural-economy/state-development/marketing.html 5. www.icmrindia.org/casestudies /catalogue/Marketing/MKTG081.htm 66

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