Marketing strategies for Organized retail to capture Rural Market Dr.J.Gopu1 T.

Girija2 ABSTRACT The Indian retailing industry is becoming intensely competitive, as more and more players are Vying for the same set of customers. Retailing is one of the biggest sectors and it is witnessing revolution in India. The new entrant in retailing in India signifies the beginning of retail revolution. India's retail market is expected to grow tremendously and become more organized. Not only the Indian brands are entering organized retailing even foreign players like Wal-Mart are entering organized retailing in India. Over the past few years, the rural market has emerged as one of the most lucrative markets for Indian companies. The rural market in India brings in bigger revenues, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Promotion of brands in rural markets requires some special measures as the characteristics of rural market differ from urban market. Many products that are successful in the urban market are failing in the rural market. There are many reasons behind it, but the main reason is usually the marketers make a product for the urban market and drag it to the rural market. To be successful in the rural market the unique characteristics of the rural market must be studied and all marketing strategies need to concentrate towards that. The great question here is does the organized retailers entering the rural market making strategies customized for the rural market. This paper speaks about different strategies followed by corporate to attract the rural market and suggest strategies for organized retailer to capture the rural market. Key words: Organized retailing, Rural market and Rural marketing strategies.
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. Assistant Professor, Department of Management Studies, BSA Crescent Engineering College, Chennai. 2. Associate Professor, National Institute of Management Studies, Chennai

INTRODUCTION The rural market in India is not a separate entity in itself and it is highly influenced by the sociological and behavioral factors operating in the country. Until few years back, the rural markets were mostly ignored and were not considered profitable even though the rural population in India accounts for around 627 million, which is exactly 74.3 percent of the total population.1 In fact the rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Similarly out of the different industry in India retail industry is one of the fastest growing industries. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. Understanding the great market in Rural India many organized retail brands have started entering the rural market. market. OBJECTIVES Primary Objective Marketing strategies that can be applied by Organized retailer to capture Rural market Secondary Objective To study state of organized retailing in India To study the opportunities existing in rural market To study the marketing strategies followed by corporate to attract rural market To suggest ways and means for the organized retailers to attract rural market. This article aims to highlight the significance of rural markets and strategies for organized retail to overcome the obstacles and operate profitable in rural

Statement of problem According to a white paper prepared by CII-Tecnopak, the rural market grew at an impressive 25% in the year 2008 and is expected to have approximately 720-790 million customers with a size of US$425 bn in the year 2010- 11.2 On the other hand the retail

Industry in India is growing at a great pace and is expected to go up to US$ 833 billion by year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at CAGR of 10%3. The rural market is no longer a non-player in the retail game. India's large rural population has also caught the eye of retailers looking for new areas of growth. A slew of supermarket chains, including those of the Tata and ITC, are set to storm the rural areas of the country as corporate realize the huge potential of the untapped market. The rural market are accounting for over one-third of the market for most durable and non-durable products. To capture further in the rural market the organized retailers need to understand the psyche of the rural consumers and then act accordingly. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. Need for the study Are our organized retailers making efforts to capture the rural market? To study the unique characteristics of the rural market and also help design the organized retailers, marketing strategies to penetrate the rural market. LITERATURE REVIEW 1. Organized retailing in India Retailing can be referred to all the activities involved in the marketing and distribution of goods and services. Different formats of retailing are Mom and Pop stores, Convenient stores, Chain of stores, Franchise, Speciality store, Departmental store, Super market , Hyper market, Shopping mall, Shopping plaza, Discount stores, E-trailers, Vending machines and Category killer or Multi brand outlet. Retailing in its initial period was witnessed at the weekly hats or gatherings in a market place where vendors put of display their products. But nowadays the retailing had become more organized. The changes in the organized retail industry are visible in the form of new retail formats. India's retail market is expected to be worth about US$ 410 billion, with 5 per cent of sales through organized retail, meaning that the opportunity in India remains immense. Retail should continue to grow rapidly up to US$ 535 billion in 2013, with 10 per cent coming from organized retail3. According to a McKinsey & Company report titled 'The

Great Indian Bazaar: Organised Retail Comes of Age in India', organized retail in India is expected to increase from 5 per cent of the total market to 14 - 18 per cent of the total retail market and reach US$ 450 billion by 20153. According to another report titled 'India Organised Retail Market 2010', published by Knight Frank India in May 2010 during 2010-12, around 55 million square feet (sq ft) of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organized retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft. All the predictions indicate the massive growth of organized retailing in India. Fig 1: The growth projection of retail industry in (US$ Billion)4

Major drivers that drive the growth of retail sector in India are raising income, the rapidly growing middle class consumers, Growth in the number of double income house holds, less time at the disposal of double income families, through media and other communication net words exposure to the world class tastes and preference of products and brands, rising work force with global travel, increasing usage of credit or debit card and growing youth population with the ability to study and work simultaneously. The organized retailing in India is not alone shared by the domestic corporate like Pantaloon, Tata groups, Reliance, RPG group, AV Birla group, it is also being targeted by foreign players like Wal-Mart.

2. Rural Marketing In India, leaving out a few metropolitan cities, all the districts and industrial townships are connected with rural markets. The rural population in India accounts for around 627 million, which is exactly 74.3 percent of the total population. The rural market in India brings in bigger revenues in the country, as the rural regions comprise of the maximum consumers in this country. The rural market in Indian economy generates almost more than half of the country's income. Rural Marketing in India Economy covers two broad sections, namely:

Selling of agricultural items in the urban areas Selling of manufactured products in the rural regions

On account of green revolution, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has emerged. But often, rural marketing is confused with agricultural marketing - the latter denotes marketing of produce of the rural areas to the urban consumers or industrial consumers, whereas rural marketing involves delivering manufactured or processed inputs or services to rural producers or consumers. 2. a. Opportunities of Rural Market The rural market in India is vast and scattered and offers a plethora of opportunities in comparison to the urban sector. It covers the maximum population and regions and thereby, the maximum number of consumers. Rural consumption and expenditure is exploding, a fact that is not being missed out by either the researchers or those who have plans for organized retail. At the very basis level, All India sales of fast moving consumer goods or FMCG are tipped to touch $100 billion by 20255 Attractive factors of rural market 6 742 million people In 2001-02, LIC sold 55% of its policies in rural India.

Of two million BSNL mobile connections, 50% are in small towns / villages. Of the 6.0 lakh villages, 5.22 lakh have a Village Public Telephone (VPT). 41 million Kisan Credit Cards have been issued (against 22 million credit-plusdebit cards in urban), with cumulative credit of Rs. 977 billion resulting in tremendous liquidity.

Of the 20 million Rediffmail sign-ups, 60% are from small towns. 50% of transactions from these towns are on Rediff online shopping site. 42 million rural households (HHs) are availing banking services in comparison to 27 million urban HHs. Investment in formal savings instruments is 6.6 million HHs in rural and 6.7 million HHs in urban. Rural literacy level improved from 36% to 59%. In 50 years only, 40% villages have been connected by road, in next 10 years another 30% would be connected. Low penetration rates in rural areas, so there are many marketing opportunities.

So, the rural market is no longer a non-player in the retail game. It is now accounting for over one-third of the market for most durable and non-durable products. Even manufacturers are developing new products with the rural consumer in mind besides using village-oriented marketing strategies for brand promotions. According to data from Mumbai-based Centre for Monitoring Indian Economy, or CMIE, while urban India spends half its income, the spending in the rural economy is 54%5. The rural market is no longer of hypothetical empirical value but is well researched and reached by most companies looking to tap India's vast and abundant bounty. Wal-Mart the well known foreign retailer well known for his less price, estimates that there is a concentration of population and wealth in villages about half of Indias population live in just one-sixth of its 600,000 villages5. And more importantly, this section accounts for 60 percent of rural wealth. Rural markets have become a more favorable destination for marketing companies because of competition in Urban Markets, Changing consumption pattern in Rural areas, Improved lifestyle, huge population and Rapidly growing market.

2. b. Myths Vs Reality of rural market In spite of many favorable situations in the rural market there are certain myths about the rural market but reality is difference and some of them are. Myth 1: Rural Market is a Homogeneous Mass

Reality: It's a heterogeneous population. Various Tiers are present depending on the incomes like Big Landlords, Traders, Small Farmers, Marginal Farmers, Labourers Artisans. State wise variations in rural demographics are present viz. literacy (Kerala 90%, Bihar 44%) and population below poverty line (Orissa 48%, Punjab 6%). Myth 2: Disposable Income is Low

Reality: Number of middle class HHs (annual income Rs. 45,000 - 2,15,000) for rural sector is 27.4 million as compared to the figure of 29.5 million for urban sector. Rural incomes CAGR was 10.95% compared to 10.74% in urban between 1970-71 and 199394. Myth3: Individuals Decide about Purchases

Reality: Decision making process is collective. Purchase process - influencer, decider, and buyer, one who pays - can all be different. So marketers must address brand message at several levels. Rural youth brings brand knowledge to Households (HH). It is not an easy task to enter the rural market because of main problems with rural marketing such as Understanding the Rural Consumer Poor Infrastructure Physical Distribution Channel Management Promotion and Marketing Communication Dynamics of rural markets differ from other market types, and similarly, rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer.

2. c. Rural markets astonishing utility of products Understanding the rural people and predicting their behavior can prove to be a daunting task because of their diverse and varied characteristics. A lot of careful attention and effort is required in this direction. Nothing can be taken for granted any kind of error can lead to a significant set back. In the past several big companies have entered the rural markets and have met with failure, either due to a communication gap between the company and the customers, or because the rural people did not find their products useful in the way they were intended to be used. There were several instances wherein rural consumers found unique and unintended use for certain products Godrej, one of Indias well-known brands, faced an uncomfortable situation with its black hair dye in Raichur (Karnataka), when it was found that the dye was being used to polish buffalos, so that they looked better when presented for sale in the village market. Good Knight Mosquito repellant mat was being used twice, once on each side. As only one side of the mat comes in contact with the heater tray in the machine, it was thought that the other side can be used again. Godrej Sara Lee(the maker of Good Knight) had to attach a foil to one side of the mat so that it was only used once. In Punjab, the washing machine was being used to make lassi in large quantitities, In Bihar it was found that Horlicks, was being fed to cattle for fattening them. Iodex, a pain reliever, was being applied to relieve the muscular pain in animals instead of washing clothes.

after a hard days work, so that they could be exploited to full advantage again the next day. The rural markets are not easy to understand and explore. Even small mistakes could lead to seemingly funny but serious consequences. The success of a brand in the Indian rural market is as unpredictable as rain. Many brands, which should have been successful, have failed miserably. This is because most firms try to extend marketing plans that they use in urban areas to the rural markets. METHODOLOGY This study involves a descriptive approach. This study describes retailing in India, Rural market, rural marketing and the unique marketing strategies followed by corporate to obtain the rural market. Based on this marketing strategies are framed for organized

retailers to capture the rural market. The data used is mainly secondary data from journals websites and published reports. Time constraint is mainly the limitation of this study. ANALYSIS The main problems of rural market are understand the rural Consumer, Poor Infrastructure, Physical Distribution, Channel Management, Promotion and Marketing Communication and Dynamics of rural markets differ from other market types, and similarly, rural marketing strategies are also significantly different from the marketing strategies aimed at an urban or industrial consumer. These unique characteristics of rural market must be studied and the marketing strategies need to be designed accordingly to capture the rural market. FINDINGS The study have brought out certain practices that has been uniquely practiced for the rural market by some leading companies to promote and sell their product in rural market. Marketing Strategy for rural market Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural marketing involves more intensive personal selling efforts compared to urban marketing. Firms should refrain from designing goods for the urban markets and subsequently pushing them in the rural areas. To effectively tap the rural market, a brand must associate it with the same things the rural folks do. This can be done by utilizing the various rural folk media to reach them in their own language and in large numbers so that the brand can be associated with the myriad rituals, celebrations, festivals, "melas", and other activities where they assemble.

Distribution Strategy for rural market One of the ways could be using company delivery van which can serve two purposes - it can take the products to the customers in every nook and corner of the market, and it also enables the firm to establish direct contact with them, and thereby facilitate sales promotion. This also acts as promotional media Promotional Strategy for rural market Firms must be very careful in choosing the vehicle to be used for communication. Only 16% of the rural population has access to a vernacular newspaper. So, the audio visuals must be planned to convey a right message to the rural folk. The rich, traditional media forms like folk dances, puppet shows, etc., with which the rural consumers are familiar and comfortable, can be used for high impact product campaigns. Some of promotional media that can effectively serve the purpose of contacting the rural market are a) Farm-to-Farm/House-to-House visit: Rural people prefer face-to-face communication and farm visits facilitate two-way communication. The advantage is that the sales person can understand the needs and wants of the rural customer by directly discussing with him and answer his queries on products and services. Potential customers in the village are identified and the companys/distributors representative makes farm-to-farm visits and highlight the benefits of the products. The person carries with him literature in local language and also samples of products. The person does not sell the product but only promotes the use of the product. Very often the local dealer also joins the representative in making farm-tofarm visits. The dealer clarifies the terms and conditions of sale and also makes independent follow up visits for securing orders. Example: This approach has been found to be very effective for agricultural machinery, animal health products and agricultural inputs. Many LIC agents and companies dealing with high value consumer durables have tried this method with success in rich rural areas.

b) Group meeting: Group meetings of rural customers as well as prospects are an important part of interpersonal media. The company is able to pass on the message regarding benefits of the products to a large number of customers through such meetings. Group meeting of key customers are conducted by banks, agricultural inputs and machinery companies in rural areas. The bankers visit an identified village, get the village people in a common place and explain the various schemes to the villagers. Such meetings could be organized in prosperous villages for promoting consumer durables and two wheelers also. Fig : Cookerey classes targeting house wives

Example: MRF Tyres conduct tractor owners meet in villages to discuss repairs and maintenance of tractors. c)Opinion leaders: Villagers place more emphasis on the experience of others who have used a product/brand to make purchase decision. Opinion leader is a person who is considered to be knowledgeable and is consulted by others and his advice is normally followed. Such opinion leaders could be big landlords, bank official, panchayath-president, teachers, extension workers etc.

Examples: a) Mahindra Tractors use bankers as opinion leaders for their product. b) Asian Paints promoted its Utsav brand of paint by painting the village Sarpanchs house a few months prior to the launch if the branch to demonstrate that the paint does not peel off. d)The Melas /Fairs: Melas are of different types i.e. commodity fairs, cattle fairs and religious fairs and may be held only for a day or may extend over a week. Many companies have come out with creative ideas for participating in such melas. Examples: a) Britannia promotes Tiger Brand Biscuits through melas. b) The mahakumbh at Allahabad is the biggest mela in India. HLL has put up 14 stalls in the mela grounds for promoting Lifebuoy. Handcarts have been deployed for increasing access. Fig 2: LG promoting their product at Rajamundry fair

e)The Haats: Traditionally on certain days of week, both the sellers and buyers meet in the village to buy and sell goods and services. These are the haats that are being held regularly in all rural areas. The sellers arrive in the morning in the haat and remain till late in the evening. Next day they move to another haat. For the marketer, the haat can be an ideal

platform for advertising and selling of goods. By participating in haats and melas, the company can not only promote and sell the products but also understand the shared values, beliefs and perceptions of rural customers that influence his buying behaviour. Fig 3: Aim toothpaste stall at a haat in rural area

f)Folk dances: These are well-appreciated form of entertainment available to the village people. The folk dance Kuravan Kurathi is popular in Tamil Nadu. The troupe consists of dancers, drummers and musicians and they move in a well-decorated van from one village to another village singing and dancing. In a day the troupe covers about 8-10 villages. As soon as the van reaches a village, film songs are played to attract the attention of the villages. This is followed by folk dances. Mike announcement is made about the companys products and leaflets are distributed. After the dance programme, queries, if any, about the products are answered by the sales person. Folk dance programme costs about Rs.5000 per day and therefore these programmes are conducted during the peak season in selected villages.

Examples: Thumps Up has sponsored Lavnis, the folk dance programme of Maharashtra and over 30 programmes have been arranged in selected rural markets. g) Audio Visual Publicity Vans (AVP Vans): Fig 4: Audio Visual Publicity Vans used to promote LG Products in rural

AV unit is one of the effective tools for rural communication. The van is a mobile promotion station having facilities for screening films slides and mike publicity. The sales person makes a brief talk about situation in the village, the products and the benefits. The ad film is screened along with some popular film shots and this continues for about 30 minutes. At the end of the film show, he distributes handbills and answers queries of the customers. The whole operation takes about 1-2 hours depending upon the products under promotion, number of participants in the meeting and time taken for question and answers. The vans move to the next village for the second show. The cost of running a fully equipped AVP unit is about Rs.4000 per day and AVP van operation has to be considered as an investment for business development in rural areas. Example: Companies such as HLL, Colgate, LG and Phillips have made effective use of AVP vans for popularizing their products in rural areas. h) Product display contests:

Package is an integral part of the product. Its main purpose is to protect the product during transit, to preserve the quality and to avoid any loss in quality and quantity. The main purpose of this contest is to remind the customer to buy the product as soon as he enters the shop. Another objective is to influence the dealer to stock the product and support the company in increasing the sales. The display contest has to be announced well in advance and promotional materials to be distributed to all the selected dealers in a geographical area. Prizes for best displays are announced to motivate the dealers; the contest lasts for about a month. A well-planned product display contest not only increases the involvement of dealers in the companys products but also increases the sales during the contest period. This is used for promoting consumer goods such as shampoos, soaps and toothpaste. i) Field demonstration: This is based on the extension principle seeing believes and is one of the most effective methods to show the superiority of the companys products to the customers. A progressive farmer who is an opinion leader is selected and the demonstration is conducted in his field in the presence of a group of farmers in the village. The farmers observe the results in the field and the local dealer calls on them in their farms and persuades them to buy the particular brand of pesticide or fertilizer. Examples: a) Hawkins pressure cooker has demonstration representatives who carry out demos in rural households. The representative receives 1% commission for every customer who approaches the dealer via demonstrations. b) Similarly effectiveness of detergents, pressure cookers, vaccum cleaners and mosquito coils could be promoted by demonstrations in selected markets. SUGGESTIONS The unique consumption patterns, tastes and needs of the rural consumers should be analyzed at the product planning stage so that they match the needs of the rural people

As the decision making is collective the members of the family preference need to

be analyzed by organized retailer and promotional tools need to be framed in such a way all the influencers of purchase are concentrated. Organized retailer need to analyze the market plans that are applied in urban market on the basis of swot with respect to rural market and necessary modifications need to be made and then presented to rural market. Organized retailer can use farm to farm, group meeting, opinion leaders, melas, haats folk dances, audio visual publicity vans, field demonstrations to explain about the benefits obtained from organized retail outlet and also to create awareness about the organized retail outlet. CONCLUSIONS Rural market is like a gold mine in the hands of organized retailers in the hands of organized retailers. The success of organized retailers in rural market purely depends upon the efforts taken with regard to analysis of character of rural market and making available of products in required quantity, creating awareness about the organized retail outlet and providing the sales promotion to initiate them to make purchase in organized retail outlet. Thus it is concluded that the success of organized retailing in rural market depends upon the means by which the organized retailers tap the make like a potter does to make a pot. Reference 1. http://business.mapsofindia.com/rural-economy/state-development/ marketing. dated 7th January 2011 2. Priyank Azad, 2010, Go Rural, marketing mantra for the competitive era, Mareketing Mastermind, November, pg. 20-23. 3. Article on retail ,http://www.ibef.org/industry/retail.aspx viewed on 16th December 2010 4. Perspective on retailing in India and rural marketing, http://www.google.co.in/imgres? imgurl=http://lh4.google.com/srivnitin/R9y412m0mxI/AAAAAAAAAjo/7qPkcmj_q 4Y/14%255B1%255D&imgrefurl=http://nitine.blogspot.com/2008/03/retailing-ruralmarketing-india.html&usg=__i9XnpOnIcRhtml

wwtEmH9PTg17v1bg=&h=333&w=450&sz=46&hl=en&start=1&zoom=1&itbs=1& tbnid=WZTMS0rfI2j9aM:&tbnh=94&tbnw=127&prev=/images%3Fq%3Dimages %2Bshowing%2Bgrowth%2Bof%2Bretailing%2Bin%2BIndia%26hl%3Den%26sa %3DG%26gbv%3D2%26tbs%3Disch:1 5. Shamni Pande, 2010, Bharath goes sopping, Business Today, December 26th , pp. 4856. 6. http://www.coolavenues.com/mba-journal/marketing/rural-marketing-challenges(7th December) opportunities-strategies?page=0,1