Rural Marketing Strategies for FMCG Success

Rural Marketing of FMCG Products
ACKNOWLEDGMENT
There are several claimants for gratitude in the task of preparation of this
project on Rural Marketing for FMCG.
I would like to express my sincere gratitude to my project guide Prof. Richa

Jain for giving guidance and taking active interest throughout my project
work.
My heartfelt thanks to the entire faculty for providing me with infrastructure

for the project work & also whose knowledge has immensely contributed in
the preparation of the project.
I would like to thank to those whose contribution certainly adds value to my

project directly or indirectly.
I would also like to thank the staff of Thakur College Of Science &
Commerce whose help was integral part of this venture.
Ms Flavia Dsouza
Thakur College of Science & Commerce
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EXECUTIVE SUMMARY
It is often said that markets are made not found. This is especially true for the rural
market in India. It is a market for truly creative marketer. Rural marketing is distinct
specialization of marketing discipline, which encompasses a customized application of
marketing tools & strategies to understand the psyche of rural consumers in terms of
needs, tailoring the products to meet such need & effectively delivering them to enable a
profitable exchange of goods & services to & from the rural market.
Already rural market is proving to be vital for the growth of most companies. Take the
largest FMCG Company in the country, Hindustan Lever more than half its annual sales
of Rs.11, 700 crores comes from the rural market.
The term rural marketing is synthesis of two words- Rural & Marketing. Rural India is
evolving, is dynamic & has stood on its own for centuries Rural Indias population is
more than one tenth of the world population, hence, important to India & the World. The
rural market consists of more than 100 million households with a total population of
about 740 million. In spite of being larger in size, rural areas are characterized by low per
capita income, low literacy, and average agricultural productivity & low level of
industrialization.
Only FMCG companies, with deep pockets, unflinching rural commitment & staying
power can play this rural game at the market. But as stated by C.K. Prahlad, The future
lies with companies, who see the poor as their customer. It is a high- risk area, but with
the promise of a large customer following as a prize for those who succeed. The Key to
reducing the risk is to understand the market, consumer needs & behavior. The rural
market is still an area of darkness for India entrepreneurs, an idea that is vast in size, but a
amorphous in detail. & yet, it represents the largest potential market in the country, with
over 75% of the population. It is a market with potential, but the marketers need to have a
long term vision & commitment. The marketer can expect results in the time frame of 10
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to 20 years. As these results are not going to come very fast, an approach of gradually
building the rural market, in phases, is needed to be successful.
Fast moving consumer goods (FMCG) have attracted Indian villagers when the urban
demand for goods is getting saturated. The manufacturing companies look at this
development as an opportunity. Large FMCG companies including Multinational
companies (MNC,s) are planning their own strategies to enter this large & developing
rural market. The marketing Strategies have to be tailor made to suit the rural condition.
Leading companies in the FMCG sector in India have taken up a development approach
to nourish this new market. The companies are Hindustan Lever Limited (HLL), Nirma,
Godrej, Proctor & Gamble, Reckett & Colemn, Karnataka soaps & detergent limited.
HLL has done considerable pioneering work in developing FMCG products for the rural
market & initiating collaborative & innovative strategies.
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INDEX
Sr.No Chapter Name Pg.No.
1 Literature Review
2 Rural Marketing of FMCG (Theory)
3 Conclusions & Recommendations
4 Results and Findings
4 Annexure
5 Referenced & Sources
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INTRODUCTION
The word Market is derived from the Latin word Marcatus meaning goods or trade or a
place where business is conducted
Philip Kotler defines Marketing as a social & managerial process by which

individual & groups obtain what they need & wants through creating, offering &
exchanging products of value with others.
American Marketing Association (AMA) defines Marketing is the process of

planning & executing the conception, pricing, promotion & distribution of ideas,
goods & services to create exchanges that satisfy Individual & organizational goals.
The word rural means places for away from towns & cities. The census of India (2001)
defines rural as that what is not urban & urban is All locations within a
municipality/corporation, cantonment board or a notified town area committee
All other locations satisfying all the following criteria:-
1) Min. population of 5000
2) At least 75% of male workforce engaged in non-agricultural activities &
3) A population density of over 400 persons per sq. km.
RBI- Definition-
Location with population up to 10,000 will be considered as rural & 10,000 to 1, 00,000
as semi-urban
NABARD- Definition- All locations irrespective of villages or town, up to a population

of 10,000 will be considered as Rural
There are currently more than 20,000 villages in the 5,000-10,000 population strata as per
the census of 2001, so any population cut off criteria should definitely include these
villages as rural areas. Of the nearly 6.4lakh villages in India, only 20,000 villages have
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population more than 5,000.For consumer expendables/FMCG the rural market can be
defined as all locations having population up to 20,000 irrespective of their status as
villages or towns.
As per national commission on agriculture, Rural marketing is a process which

starts with a decision to produce a saleable farm commodity & involves all aspects
of market structures or system, functional & institutional, based on technical &
economic considerations & includes pre- & post-harvest operations, assembling,
grading ,storage, transportation & distribution
Definition of Corporate Rural Marketing:-

Rural marketing can be defined as a function that manages all activities involved in
assessing, stimulating & converting the purchasing power of rural consumers into an
effective demand for specific products & services & moving these products & services to
the people in rural areas to create satisfaction & a better standard of living & thereby
achieving organizational goals.
Rural marketing has also been defined as the process of developing, pricing, promoting,
distributing rural-specific goods & services leading to exchange between urban & rural
markets, which satisfied consumer demand & also achieves organizational objectives.
Marketing is all about getting to know your customer
Although the per capita income in rural is less than half of urban, the rural sector already
accounts for 53% of FMCG & 59% of durables brought in India. However, rural
penetration & consumption levels for most product categories are much lower than urban
because of limited purchasing power with villagers. Improved irrigation facilities,
infrastructure, and better roads, free trading in agri produce, removal of excise duty on
tractors, agri implements; & the insurance scheme for farmers announced in the budget
should all give a boost to the rural economy & generate a greater demand for corporate
products. However, to benefit from this new opportunity, urban markets will have to gain
a better understanding of rural lifestyles, needs & aspirations & design appropriate
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products. Corporate will need to extend their distribution reach to service this new
segment living in six lakh old villages, offer smaller packs at lower process points &
communicate in the local Idiom to connect with rural audiences. A pan rural India
marketing strategy will not work. Corporate will have to not only think local, but also act
local.
Adi Godrej, chairman, Godrej group. The rural consumer is discerning & the rural
market is vibrant. At current rate of growth, it will soon outstrip the urban market. The
rural market is no longer sleeping but we are
OBJECTIVES
1. To study and analyze the factors that influence consumer buying behavior of the rural
consumer with respect to FMCG products.
2. To identify and define the marketing strategies to be adopted by FMCG companies
that will help them to gain competitive advantage in the industry, earn profits without
jeopardizing the needs and desires of rural consumers.
RATIONALE OF THE STUDY
In the fast changing business environment, where all business firm are expanding their
activities in different business segments and at the same time diversifying in different
geographical areas, all the business organizations are going global to earn huge profits.
So the ultimate aim of the marketing manager is to tap the untapped market area. The
reference to the word untapped market area brings to our mind is the rural area, since
India is the land of villages, or we can say the real India lies in Rural India, but most of
the business firms do not concentrate on rural areas because of low profit potential in
these areas. But the smart Marketer will first focus on rural areas to gain competitive
advantage over other firms.
So the main purpose of undertaking the project is to put a light on what steps the
marketer should follow or what marketing strategies should be adopted in order to sell the
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product in the market and at the same time what communication strategy to follow to
convince the rural people to buy the product.
METHODOLOGY
1. The major source of gaining information is Internet.

2. Secondly, there are many personal views supporting this topic.
3. The collected data was analyzed to find out the relevant facts.
4. The analyzed information is projected in the report.
LIMITATIONS
In developing countries like India, illiteracy and poverty being the major concern serves
as a drawback for Internet marketing. Moreover, educated people also do not make a
move towards the trend of Internet marketing and prefer traditional marketing due to
privacy issues, leakage of confidential data which creates huge financial loss and
psychological disturbance.
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RURAL MARKETING
Villages are the heart of India. Approximately 75% of Indias population (equaling 12.2%
of the Worlds population) lives in 6, 38,365 villages spread over 32 lakh square
kilometers. Of this rural population, about 90% is concentrated in the villages having
population less than 2000. As per the Census (2001), rural segment comprises 13.5 cr.
households which constitute 72% of total households in India with 48 cr. Adults
households.
Phases of rural marketing:-

Phase Time period Nature Major Source Target
production marketing Market
1. From Agriculture Agriculture Rural Urban
Independenc marketing produce
e to Green
Revolution
2. Green Marketing of Agricultural Urban Rural
Revolution to agri-inputs inputs
pre-
liberalisation
period
3. Post- Rural Consumable Urban & Rural
liberalisation marketing s & durables rural
period in 20th for
century consumption
& production
4. 21st century Developmenta All products Urban & Urban &
l marketing & services rural rural
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Nature & characteristics of the rural market:-
Large & scattered market:-Indias rural market is large & scattered in the sense
that it consists of approximately 75 cr. rural consumers who live in approximately
6,38,365 villages spread over 32lakh square kilometer area
Heterogeneous market:-The rural market is not a homogeneous one. As many as

20,000 ethnic groups are present in rural India & this poses a formidable
challenge to the marketer. There are 24 villages & 1642 dialects & the dialects
(boli) varies every 100 km. or so, making it extremely difficult to develop a
uniform promotional message. Rural India is thus a mosaic of markets & this
heterogeneity is the hallmark of the rural market
Standard of living: - Unreliability factor in case of rural income makes the rural
customers extremely conscious in their purchase behaviour as they are not
confident about their future earning as over 70% of the rural population is
employed in small scale. Agriculture & the related occupations & the propensity
to save for the future exigencies makes them spend less to improve their standard
of living even when they have good income. Besides this low literacy, social
backwardness, low saving, traditional attitude etc. also have contributed to lower
standard of living.
Infrastructural facilities: - The infrastructural facilities like roads, warehouses,

communication systems & financial facilities are inadequate in rural areas. Roads
do not connect nearly 50% villages in the country. Promotion & physical
distribution thus becomes very difficult in the rural terrain because of inadequate
infrastructural facilities over 50% rural households have access to electricity as
main source of lighting but 46% still use kerosene for lighting
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According to the NCAER Indian Market Demographics Report 1998, the consuming
class households (annual income between Rs.45,001 & Rs.2,15,000) in rural India equals
the number in urban India .
Rural India is generating more than half of the national income. Indias 58%disposable
income comes from its rural parts where 41% of the countrys middle class homes are
located. The 55.6% contribution to the national income by 74.6 cr. rural population is
higher than urban Indias contribution of 44.6% by 25.4 cr. people. But the per capita
income turns out to be significantly lower that in rural areas because of large population
base.
The importance of rural market can be understood from the fact that if Indias rural
income grows by 1% there will be a corresponding increase of about 10,000 cr. in the
villagers buying power.
Rural India: - A fertile ground for marketing.

1) 70% of the villages to be connected by the road in the tenth plan
2) Procurement of productive asset is also on the increase in rural area, leading to
increased disposable income & higher purchasing power.
3) A sum of Rs.7, 36,500 crore has been earmarked under the tenth plan for Agri institute
credit.
4) A sum of Rs.86, 000 crore has been disbursed under the Kisan credit card scheme
5) India has the largest number of the tractors in the world
6) The 6.6 million rual people who have invested in formal
Ages & stages of the life cycle
Size of rural market

Estimated annual size Rural market
FMCG Rs.65,000 crore
Durables Rs.5,000 crore
Agri-inputs (incl. tractors) Rs.45,000 crore
2/4 wheelers Rs.8000 crore
Total Rs.1,23,000 crore
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Source: - Francis Kanoi 2002
RURAL INDIA
Rural population in India:-
Rural Ratio Urban Ratio Total in
Year population percentage population percentage million
in million in million
1951 295 82.2 62 17.4 357.0
1961 360 82.0 79 18.0 439.0
1971 439 80.1 109 19.9 548.0
1981 508 76.0 160 24.0 668.0
1991 621 74.3 215 25.7 836.0
2001 736 70.2 285 27.2 1021.0
Source: - Census of India, 2001
Location & concentration of rural population- Geographic factor:-

Sr. Population range Number Population to Populatio Proportion to
no. (No. of persons) of villages total percentage n in total percentage
millions
1. Less than 200 1,20,073 21.55 12.19 2.4
2. 200 to 499 1,50,722 27.05 51.31 10.1
3. 500 to 999 1,35,928 24.40 97.03 19.1
4. 1,000 to 1,999 94,486 16.96 131.57 25.9
5. 2,000 to 4,999 46,892 8.42 137.67 27.1
6. 5,000 to 9,999 7,202 1.29 47.24 9.3
7. 10,000 & above 1,838 0.33 30.99 6.1
8. Total 5,57,137 100.00 508.00 100
Literacy level:-
Literacy level in percentage:-
Sr.
no. Sex 1971 1981 1991 2001
Rural Urban Rural Urban Rural Urban Rural Urban
1. Males 34 61 41 66 58 81 61 82
2. Females 13 42 18 48 31 64 32 67
3. All 24 52 30 57 45 73 50 75
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Rural market structure- Demographic Environment
Household in million:-
Year 1991 2001
Rural Urban Total Rural Urban Total
Household (million) 112 40 152 138 54 192
Family size number 5.55 5.32 5.36 5.31
House Type 1981 1991 2001

Pucca 22 31 41
Semi-Pucca 37 36 36
Kuccha 41 33 23
100 100 100
Literacy rate:-
Census 1991 Census 2001 % increase
Male Female Persons Male Female Persons Persons
Rural 57.87 30.62 44.69 71.18 46.58 59.21 14.52
Urban 81.09 64.05 73.08 86.42 72.99 80.06 6.98
Total 64.13 39.29 52.21 75.85 54.16 65.38 13.17
Source: - Census of India
Socio-Economic Rural Characteristics, Behaviour, Aspirations & Lifestyle

Classification (SEC)
R1 Land lord farmers, educated, exposed to urban environment,
children in school/colleges in nearby towns, aspiring to match
urban lifestyle, technology adopters, experiment with modern
farming methods, eager for additional source of income, socially
& politically well connected, high spender on social occasions,
own durables like tractor, 2 wheeler, TV, music system, steel
almirah, LPG, refrigerator, mixer grinders
R2 Rich farmers with about 5 acres of land, may not be educated, but
wants children get educated with friends & relatives in urban,
consult them for technology adoption, conscious of status, aspires
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to be well known in social & political circles, own durables like

tractor, 2wheeler, TV, LPG
R3 Average land holding 2-5 acres, manages small savings, children
sent to village school, opts for time tested technology, low risk
taker, owns durables like TV, tractors (self & rental)
R4 Has little or no land, agricultural labour, living below poverty
line, a major purchase from public distribution system
Distribution of Indian population by age (All India Rural Urban) in millions:-

Year Kids Children Adolescent Young Mid Aged Total
s adults aged
0-4 5-14 15-19 20-34 35-54 55+
1996 119.5 233.2 90.7 224 178.1 88.7 934.2
2001 108.5 239.1 109.0 246.8 207.3 101.7 1012.4
2006 113.5 221.2 122.4 279.1 239.2 118.7 1094.1
Hardly any shops in 2.30lakh villages

17% of villages, 50% of rural population, 60% of rural wealth
Distribution of Towns:-
Class of town Population Number of towns Percentage of towns
Class 1 More than 1lakh 423* 8.6%
Class 2 50,000-99,999 498 9.6%
Class 3 20,000-49,999 1386 26.9%
Class 4 10,000-19,999 1560 30.2%
Class 5 5,000-9,999 1057 20.5%
Class 6 Less than 5,000 237 4.6%
Total 5,161 100%
* 10lakh=27, 5-10lakh:42, 1-4lakh:354
Source: - Census of India 2001
Indian villages according to population size

Villages in size Villages in size % of Total
Population size groups,2001 groups,1991 Population
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for 2001
Number Percen Number Percen
t t
Less than 200 96,855 15.6 1,03,952 17.9 1.2
200-500 1,36,454 21.4 1,41,143 24.3 5.9
501-1,000 1,56,737 24.4 1,44,998 25.0 14.5
1,001-2,000 1,40,751 21.9 1,14,395 19.7 25.9
2,001-5,000 87,206 13.5 62,915 10.8 37.5
More than 5,000 20,363 3.2 13,376 2.3 15.0
Total no. of 6,38,366 100 5,80,779 100
inhabited
villages
Source: - Compiled from Census 2001 & 1999
Indian states (Number of villages)

State/UT No. of villages Stae/UT No. of villages
All India 6,38,365 Assam 26,247
Jammu & Kashmir 6,652 West Bengal 40,783
Himachal Pradesh 19,831 Jharkhand 32,615
Punjab 12,729 Orissa 51,352
Chandigarh 24 Chhatisgarh 20,308
Uttaranchal 16,805 Madhya Pradesh 55,392
Haryana 6,955 Gujarat 18,544
Delhi 165 Daman & Diu 23
Rajasthan 41,353 Dadra & Nagar Haveli 70
Uttar Pradesh 1,07,440 Maharashtra 43,722
Bihar 45,113 Andhra Pradesh 28,123
Sikkim 452 Karnataka 29,483
Arunachal Pradesh 4,065 Goa 359
Nagaland 1,315 Lakshadweep 24
Manipur 2,391 Kerala 1,364
Mizoram 817 Tamil Nadu 16,317
Tripura 870 Pondicherry 92
Meghalaya 6,023 Andaman & Nicobar islands 547
Rural Population
Indian population overview
As per Census Data
Sr. No. Year 2001 1991 1981
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1. Population in million 1027 846 683

2. Density per square km 324 273 230
3. Person per household 5.5 5.52 5.55
4. Villages inhabited000 627 627 579
5. Rural population (million) 742 629 524
6. Urban population (million) 285 218 159
7. Rural population as % of total population 72.2 74.3 76.7
Social Economic Classification (SEC) Rural:-

Type of house
Education Pucca Semi pucca Kuccha
Illiterate R4A R4A R4B
Below SSC R3A R3B R4A
SSC/HSC R2 R3A R3B
Some college not graduate R1 R2 R3B
Grade/PG (General) R1 R2 R3A
Grade/PG (Professional) R1 R2 R3A
The allocation for rural development has increased from Rs.8, 900 crore in the seventh
plan to Rs.34, 400 crore, Rs.89, 000 crore & Rs.1, 20,000 crore in the Eighth, Ninth &
Tenth plans respectively. Human Poverty Index (HPI)
Period Rural Urban
1981 53 27
1991 44 22
Source: - Human Development Report 2001
Population below the poverty line (Rural)

period No. of persons (million) Percentage of persons Poverty line (Rs.)
1983 252 46 89.5
1993-94 244 37 20.6
1999-2000 193 27 328
Source: - Human Development Report 2001
Sectoral Allocations during the five year plans (Rs. Billion)

Heads of Development Seventh plan Eighth plan Ninth plan Tenth plan
1985-90 1992-97 1997-2000 2002-07
Agriculture 105 225 372 589
Rural Development 89 344 890 1,219
Source: - Planning Commission
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Components of Non-food items Source NSSO 2001

By 2002, 5, 07,000 villages (i.e. 86% of total number of villages) had been electrified
(Source:-Planning Commission, Tenth five year plan)
Respondents Sampling- SEC categories

R1- most prosperous R4- least prosperous
SEC categories:-
R1- 3% R2- 9% R3- 36% R4- 52%
SEC Rural % of rural SEC Urban % of urban

population population
R1 4 A 10
R2 11 B 17
R3 37 C 21
R4 48 D 23
E 28
Source: - IRS 2003-04
The purchase behaviour SEC is often different from other SECs. They generally make
bulk purchases from nearby town markets as they look for more variety & better quality
products.
SEC R2 & R3 prefer to purchase from weekly haats which offer opportunities to bargain.
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Rural vs. Urban shops

Urban Rural
1.68 million outlets spread over 5,000 town 3.5 million outlets spread over 6lakh
& cities villages
Source: - ORG 2002
Literacy level
Census 1951- Literacy in rural area-25%
Census 1991- Males-52% Female-39%
Census does not include children below 5 years old
2001- Literacy rate-65.4% all India
Rural area less than 60% male 45% for females
Consumer expenditure in rural areas:-

Consumer expenditure in rural areas (Value in per person for a period of 10 days)
Amount Percentage of total
Food 110.25 64.10
Non-food 61.82 35.90
Total 172.00 100.00
Source: - Rural Development Statistics
Rural Income Pattern- Economic factor:-

Source of Income Proportion to total percentage
Pattern of rural income Census of India,2001
Agriculture 58.80 55
Agriculture wages 16.10 20
Business & Crafts 8.80 8
Non-Agricultural wages 7.20 8
Salaries 2.50 3
Current Transfer 1.90 2
Others 4.70 4
Total 100.00 100
Source: - Pattern of Rural Income & Census of India, 2001
Demographic Factors- Occupation Pattern:-

Sr. no. Occupation Proportion of Rural
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Population percentage
1. Agriculture 52
2. Agricultural Labour 25
3. Business 10
4. Non-Agricultural Labour 9
5. Salary Earners 2
6. Not Gainfully Employed 2
Total 100
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FAST MOVING CONSUMER GOODS
A study by the Chennai based Francis Karoi marketing planning services estimated the
total value of the rural market at a whooping Rs.1, 23,000 cr., divided into the categories-
FMCG Rs.65000 cr., durables Rs.5000 cr., tractors & agri inputs Rs.45000 cr. & two &
four-wheelers Rs.8000 cr. Approximately 32.5 cr. Indians lived below poverty line (BPL),
which is around one-third of the countrys population. The incidence of poverty in rural
areas at 39.4% is much higher than 28.4% in urban areas, although, about 80% of the
poor people in India lived in rural areas in 1995 but this does not mean rural population is
above the poverty line & in actual terms it turns out to be a large number.
The percentage of BPL families declined from 46% to 27%. But actual number remains
more or less the same. The percentage of BPL population varies significantly from one
state to other for ex., Orissa with 48% BPL population is poles apart from Punjab where
which this figure is just 6%(planning Commission, Government of India) The rural
FMCG market, comprising a basket of 20 products was worth Rs.44,000 cr. In 1998,
accounting for over half of the all-India market then. The rural FMCG market grew at an
annual average rate of over 12% between 1993 & 1998
The rural household spends Rs.3, 203 per years for 22 FMCGs, that is Rs.229 per month
& this figure excludes cereals, pulses, vegetables & milk. The 1988-93 periods saw a
good average annual growth rate of 5.8% in the FMCG sector. NCAER data shows that
in this period the rural FMCG growth was greater than the urban increase. During the
next five year (1993-98), the agriculture sectors average annual growth fell to 1.94% but
the FMCG growth was around 12%.
The formidable challenge in the FMCG sector is to maintain quality, build aspiration
value & at the same time keep the prices lower to make the products affordable to
Bottom of the Pyramid (BOP) customers
FMCG are also termed as non-durable goods- a tangible item that is quickly consumed,
worn out or outdated & consumed in single use or a few uses consumer products used for
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personal, family or household use are further classified as three types: Convenience,
Shopping & Special categories.
Characteristics/ Features of FMCG:-

The sector touches every aspect of human life, from looks to hygiene to palate.
This industry is characterised by a strong focus on the floor Ps Product, Pricing,
Place & Promotion.
It is a high volume, low value driven industry in most categories.
It is brand driven, rather than product driven.
The capital investment is in the area of marketing: Brand building & Promotion.
Distribution network is extremely vital for the success of an organization in this
Industry.
FMCG sector is the cornerstone of Indian Economy. It has been in existence for a quite a
long time, but it began to take shape only during the last fifty- odd years. FMCG, the
fourth largest sector of Indian Economy which had an estimated market size of Rs.85,
000 cr. in 2003, is a significant direct & indirect employer out of the total spend of Rs.89,
000 cr. more than Rs.53, 000 cr. was attributable to rural areas.
Launch cost is as high as 50-100 per cent of the revenue as the brand matures, gain
consumer acceptance & as turnover rises.
Around 60% of Indian FMCG market is unorganized. Local players had nearly 70% of
the FMCG market. In the FMCG sector increasing competition is the main reason for loss
of pricing poser in most brands. In the FMCG industry in India, companies distribute
their products to over 10lakh retail outlets or point of sales.
Cash poor & low level of income the poor consumer has to be accessed differently.
Major Indian consumer product companies (Britannia, P& G, HLL, Colgate etc.) have a
very sound presence throughout the Indian market with their strong brands. The leading
companies make considerable investment in R & D to sharpen & maintain their edge in
the business. Brand equity, therefore is an extremely important factor in FMCG Industry.
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Cavinkare gave HLL a run for money in the shampoo market; Anchor challenged the
dominance of Colgate & HLL in the toothpaste market. Jyoti labs dislodged the Reckitt &
Colemons long time leader Robin Blue with its Ujala Fabric Whitening. Flanking attacks
make excellent marketing sense for smaller & regional players with limited resources.
This is how the brainchild of Karsan Bhai Patel, Nirma detergent powder became a
national brand & a household name as well.
The phenomena the pricing war is very common in FMCG sector.
Penetration of different FMCG product categories in rural market:-

Category Penetration (%) Highest Penetration Brand
Toilet soap 91% Lifebuoy
Washing cake/Bars 88% Wheel
Edible oil 84% Double Hiran Mustard
Tea 77% Lipton Taaza
Washing powder/liquid 70% Nirma
Salt 64% Tata Salt
Biscuits 61% Parle-G
Source-ORG-MARG R Panel, Strategic Marketing, July-Aug 2002. pp 32
Fast Moving Consumer Goods (FMCG)

Product Basket:- Toilet soap, Washing cake, Tooth powder, Body talcum powder, Hair
oil, Shampoo, Face cream, Lipstick, Nail polish, Packaged biscuits, Tea, Health
beverages, Cooking oil, Vanaspati, Electric bulb, Electric tube, Footwear, Cigarettes.
The major players in the FMCG category in rural market

HLL, Dabur, Marico, Colgate-Palmolive, Nirma, Cavinkare, & Godrej
Rural FMCG Market will boom

Category Total Size+ % Growth ** Rural size Urban + Rural
2001-02 * 2006-07 *
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Toilet soap 7,500 13.40 6,021 11,291

Body talcum powder 940 23.65 793 2,292
Toothpaste 2,080 23.50 1,441 4,140
Cooking medium 17,000 10.91 15,377 25,806
(oil)
Cooking medium 3,900 7.63 2,844 4,108
(Vanaspati)
Tea 6,500 10.97 4,955 8,337
Health beverages 908 28.54 601 2,110
Electric bulbs 750 9.40 354 555
Electric Tubes 158 10.15 74 121
Cigarettes 7,662 13.09 6,422 11,879
Packaged biscuits 2,500 6.79 1,323 1,837
Hair oil/cream 175 30.85 179 689
* Projections + figures in Rs. Crore for 1998-99
** Annual growth rates compounded for last five years
Source: - Business Intelligence Unit & National Council for Applied Economic Research
(NCAER)
Most popular consumables- Rural ranking, urban ranking

Rural Ranking Ranks Urban Ranking
Toilet soap 1 Toilet soap
Washing powder 2 Biscuits
Packaged tea 3 washing powder
Biscuits 4 Packaged tea
Detergent cakes 5 Detergent cakes
FMCG companies targeting rural markets in India/ Rural Shop Window:-

Company Products Strategy
Colgate Palmolive Dental cream Tapping 1.4 lack new
villages in a year
Dabur India Chawanprash digestive Creating awareness by
lozenges taking bowling alleys to
villages
Godrej soaps Toilet soaps Setting task force to hike
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per capita usage

HLL Personal products & Door to door selling in
detergents & FMCG villages of population under
2000
Mahaan foods Pickles, ghee, vadies & Launched first TV ad
papads campaign to enhance image
in rural areas
Marico Hair oil Selling low price sachets
Contribution of rural market to all-India market (in terms of volume):-

Sr. Product category Name of product Contribution in
no. percentage
1. Washing & cleaning material Detergent, 45.5
Soap cake/Bars, 68.0
Washing powder 55.0
2. Toiletries Premium soaps, 26.0
Popular soaps, 50.5
Toothpaste, 39.0
Toothpowder, 24.5
Shampoos, 6.5
Safety Razor blades, 50.5
Shaving rounds, 31.0
Shaving creams. 5.0
3. Cosmetics Talcum powders, 43.0
Hair oils, 22.0
Acne preparations 23.0
4. Food/Beverages Packaged tea, 40.5
Coffee, 15.0
Milk foods, 20.0
Weaning foods, 18.0
Beverages 8.0
5. OTC products (over the Glucose powders, 42.0
Rubefacients, 38.0
counter)
Cold/Analgesics 45.0
6. Miscellaneous Batteries, 56.0
Torches 33.0
Source: - Several sources like Business India, The Economic Times etc.
Page 24
Rural sales as proportion to total sales of some FMCG companies

FMCG company Percentage rural share
Hindustan Lever Limited 50%
Colgate-Palmolive 50%
Godrej (GCPL) 30%
Cavinkare 33%
Marico Industries 25%
Cadbury India Ltd 25%
Heinz 20%
Nicholas Piramal 19%
Source: - The Economic Times dated January 28, 2002 pg.1
CONSUMER BEHAVIOUR
Differences in consumer behavior in rural & urban markets
1) Need-based buyer behaviour: - When compared to the Indian urban society, which
is turning towards consumerism; the rural consumer is likely to remain driven by
his needs. First the will therefore be cost-conscious & thrifty in his spending habits.
2) Conscious Decision-making:- The urban consumer may be an impulse buyer; but

the rural consumer is more discerning because of income limitation. The rural
consumer is very suspect of being fooled & does not make the decision very fast.
3) Value for money: - Although all the four Ps apply in the rural market, price is an
important determining factor. Therefore, the challenge for the marketer in the
hinterland is to develop the right product proposition & to ensure that it is available
at those places where the rural consumers actually buy it. Today sachets of
shampoo, toothpaste, hair oils, & several other products are making it possible to
tap the vast rural market. Companies come up with special rural packaging like
Chic shampoo sachets @ Rs.1; Parle-G tikki packs @ Rs.2, Shanti Amla oil by
marico.
Page 25
4) Consensus decision making: - The urban buyers behavior is individual or at the

most family-driven, whereas in rural areas the decision making is a collective
process. The rural buyer has to ensure social acceptance of his decision making &
the products he is purchasing. Therefore, he prefers census decisions. Parties
involved in the influencing or making a decision can be an opinion leaders, retailer
& family members.
5) Innovative resistance to change: - Sociological distinctiveness & innate resistance

to change make the rural consumers suspicious of all change as they have a strong
fear of ridicule from others.
6) Different lifestyle & product usage environment: - The product-usage environment

shapes the wants & consumers thus, solution to the different needs of consumers are
different in many cases for urban & rural markets & understanding of this product
use situation, which could be different in urban & rural setting, will unravel cost of
opportunities for the marketer, but the lack of it will pose a serious challenge.
7) Different perceptions with regard to marketing stimuli: - culture influences the

perceptions & behaviour; therefore preferences for colour, size, shapes & taste lead
to a situation where the same products/promotion is perceived differently in
different socio-cultural settings.
8) Brand Consciousness: - Ogilvy & mather rural communication networks head,

O.K. Bose, says, branded goods comprise 65% sale in villages today, & the share
of non-branded goods is shrinking dramatically. The rural consumer recognizes the
package of Parle biscuits pack by its yellow stripes & Parle baby. Consumers refer
to Nirma as the peela powder. The rural world values logos, colours & symbols for
brand identification.
9) Brand loyalty:- Ponds is a leader in talcum powder category with a penetration of

65% & volume contribution of 56% moreover, 60% of Ponds users in rural India
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have purchased no other users in rural India have purchased no other brands i.e.
They are 100% brand loyal, which reflects the strength of a brand in rural Bazaar. In
the skin care category, fair & lovely fairness cream with the penetration of 75%
accounted for 60% of the skin care market in rural India in 2002. It also enjoys the
undistinguished patronage of 58% of its user households. Thus, both Ponds & fair
& lovely were enjoying almost monopoly in the rural market in their respective
categories.
10) Quality Consciousness: - The rural consumer wants a good product with consistent
quality. The product must perform. The rural consumer may be illiterate but they
have plenty of common sense & survival skills.
11) Rising aspirations: - The rural consumers are becoming conscious about their
lifestyle & their right to live a better life. They are becoming more demanding &
choosy in their purchase behaviour than ever before because of increase in
awareness, aspirations & disposables income village girls are saving some money to
buy fair & lovely at weekly haat.
12) Innovative uses of products: - Horlics was used in Bihar as a health beverage for
fattening up cattle. Iodex is also rubbed into the skin of animals after hard days
work to relieve them from muscular pain. In a market where hair dyes is used to
paint the buffaloes.
Consumer Behaviour:-
Consumer- buying behaviour models
Marketing Other stimuli Buyers Buyers decision Buyers decision

Stimuli Characteristic process
s
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Product Economic Cultural Problem Product choice

recognition
Price Technological Social Information search Brand choice
Place Politics Personal Evaluation Dealer choice
Promotio Cultural Psychological Post purchase Purchase timing
Purchase amount
n behaviour
Consumption by age & life-cycle stage: Rural vs. Urban

Products & Services
Age Life cycle stage Urban Rural
Below 12 Child Video games, Chocolates, Toys, ice candy, daliya
Beverages/health drinks
13-19 Teenage Cell phone, motorcycles, Bicycle, television, cinema
Internet
20-40 Young Car, personal computer, Motorcycle, telephone,
branded clothing, alcohol, LPG, tailored/unbranded
stores/malls clothes, country/local (haat
bhatti)liquor, haat
40-60 Middle aged Luxury car, credit cards, Tractor, kisan credit card,
house, health insurance, postal savings, mela
holiday trips
Above 60 Old Clubs, theatre, parks Chaupal, playing cards,
pilgrimage
Comparison of Rural & Urban Lifestyles:-

Dimensions Urban Rural
Demographics Convent educated, salary earner, Govt school, self employed, large
small nuclear family, large dense family, small/scattered
population, apartments population,
Activities Office jobs, internet surfing, health Agriculture, physics, sports,
club, shopping, club & party gossip, playing cards, cinema,
religious congregation
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Interests Chinese, continental food, Desi food, milk, bright coloured

designer clothes, beauty saloons, clothes, jewellery, visiting towns,
holiday trips markets/mela
Consumerism: - the shift
Loose unbranded tea Packaged, branded tea

Home made sweets (jaggery) Branded biscuits
Open vessel wood fire looking cycle Pressure cooker cooking on LPG
Earthen vessel for cool water Refrigerator for cold water
Sharbat, nimbu paani Aerated drinks
Rural consumer classification percentage

Rural consumer classification 1995-96 2006-07
The affluent/ Households owning personal car/jeep with 1.6 5.6
very rich other products
The well-off Household owning any/all of these-air- 2.7 5.8
conditioners, motorcycle, scooter, washing
machine, refrigerator, colour TV with other
durables but not car/jeep
The climbers Household owning any/all of these mopeds, 8.3 22.4
VCR/VCP, mixer, grinder, sewing machine,
audio-equipments, B/W TV, geyser with other
durables but not these mentioned under first
three categories
The aspirants Household owning any/all of these- bicycle, 26.0 44.6
electric fans, electric iron with other durables
but not those mentioned under first three
categories
The destitute Households other than those classified under 61.4 20.2
categories 1 to 4 above (owning any/all/none of
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these- wrist watches, pressure cooker, cassette,

recorder, transistor/radio
Source:- NCAER
Buying Roles:-
Initiator: - One who suggests the idea of buying.
Influencer: - One whose views influence the decision.
Decider: - One who decides to buy or not.
Buyer: - One who makes the actual purchase.
User: - One who consumes or uses the product.
Type of Urban Profile Rural Profile

consumer
Innovator Young, public school educated Young progressive farmers (plans
affluent, in business, fun loving crop rotation, new crops), urban
party goers, credit card holder exposure (friends, relatives, children
in school/college), Kisan credit card,
additional income(part time service,
agents)
Early adopter Young, educated, affluent, Rich farmer, high disposable income,
employed in MNC, with urban exposure (children in
exposure to media, credit card school/college), high social status,
holder conscious evaluator, kisan credit card
Early Young, educated, married, Mediocre farmer, member of
majority disposable income, self cooperative ready fro kisan credit
employed/in service card, willing to adopt technology
product
Late majority Middle aged, in service/self Member of cooperative society,
employed, opts for consumer hesitates to take agri-loans, adopts
schemes only time tested technology/product
after approval from opinion leader
Laggard Middle aged in service, shops in Marginal farmers using traditional
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neighborhood forms of cultivation
Demand: Rural vs. Urban

Sr. Features Rural Urban
no.
1. Demand pattern Seasonal Uniform
2. Spread Widely spread Concentrated
3. Literacy level Low High
4. Sources of supply Inadequate Adequate
5. Physical communication Facilities Poor Very good
6. Product knowledge Not known Known
7. Awareness of needs Not known Known
8. Sources of information Word of mouth Any media
mostly rural
9. Product concept Not known Known
10. Timeliness of supply Untimely Timely
11. After-sales-service availability Inadequate Adequate
12. Expenditure pattern Somewhat Productive
unproductive
13. Guidance on usage Needed Not needed
14. Per capita income Low High
15. Product as status symbol Mostly no Mostly yes
16. Consumer protection Rarely available Easily available
Status Symbol
Rural Urban
Social/political status Educational degree
Tractor (50 HP +)/Jeep/Car Car
Large pucca house with courtyard House wealth
Childrens city education/Jobs Children school/college
Land Air conditioning
Telephone Club membership
Pilgrimage Holiday abroad
Levels of social interaction:-

Urban Particulars Rural
Parties, Social Gathering, Place of meeting Choupal, community
House visits meeting
Once in while Frequency of meeting Almost daily
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Almost every time Meeting people new to the Very rare

circle
Usually by phone Keeping in touch Personal interaction
A.C. Nielsen Study:-

Differences & variation in climate affect the demand for some products for example;
talcum powder & deodorants sell more in the hot & humid parts of south India. The sever
winter in the north India leads to higher demand for Chyavanprash during this season.
Development levels:- In east India, the poor electricity infrastructure aids sales of
flashlights, batteries & mosquito coils.
For product like Chocolates, butter & ice cream, refrigeration facilities are essential.
Differences in food habits help identify gaps in portfolio or point to the need to develop
alternative products & promotion strategies. People in south India extend their
preferences for the coffee taste even to the toffees. Identifying regions with supply gaps
help marketers to priorities their efforts. In eastern India, low milk availability aids sales
of categories like milk powders.
Water scarcity in the areas like Tamil Nadu leads to increased sales of packaged drinking
water.
Cultural differences & profile of people: - people in north India tend to have large
households, hence their preferences is for large economy packs. In the south India small
packs sell more as the household size is smaller.
Traditional ways of thinking & cultural habits aid sales of herbal/natural products &
affect sales of color cosmetics.
Outgoing image: - conscious people in north India buy more high-end color cosmetics.
MARKET SEGMENTATION
Definition of Market segmentation:-
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According to Philip Kotler, Market Segmentation is the subdividing of market into

homogenous sub-sections of customers, where any sub section may conceivably be
selected as market segment to be reached with a distinct marketing mix
According to W. J. Stalion, Market Segmentation consists of taking the total

heterogeneous market for a product & dividing it into several sub-markets or segments,
each of which tends to be homogeneous in all significant aspects
Geographic factor, Demographic factor, Economic factor
Benefits of market segmentation:-
Customer-oriented Philosophy: - As the marketing mix will be determined on the

basis of the homogeneous market segments. It helps in serving the needs of
customer in an optimum manner.
Enables tailoring of marketing programmer: - As the marketer is aware of the

consumer needs, he can develop customized & tailored marketing programs that
can delight the customers with benefits & the experience.
It Enables development of strong positioning of brand as the organization is

serving the customer needs in a highly customer-oriented manner. It establishes a
strong image of the organization in the target market.
Conditions for Effective market segmentation:-
Measurable:-The market segment must be measured in order to calculate the

market potential. This will be there basis to develop marketing strategies to tap
the potential
Accessible:-The market segments need to be accessible by marketing efforts in a

financially viable manner
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Profitable:-the market segments need to be large enough to be profitable

Data availability: - Certain type of data must be available about the market of
significantly important segmentation variable. Then only effective segmentation
can be executed.
Segmentation of rural market: -

India has about 6, 38,000 villages, 50% of the villages are very small having a population
less than 500 with a limited purchasing power & many of them do not have even a single
shop. The next following categories with population of 501 to 2,000 numbering 2.5lakh
villages have around five shops. These villages may not be good enough for a favorable
distribution cost benefit equation to begin with, but can be tapped later after successful
tapping the villages with a populating more than 2,000.
Therefore the role of segmentation becomes extremely important in the rural market.
Marketer has to implement market penetration effort in phase going step by step. The
lower handing fruits need to be priced up first for revenue gains & for the learning that
will come with it. These initial gains can form the basis for further expansion deeper into
rural market.
Companies therefore need to focus initially on villages with the population of 2,000 or
more & there are 60,000 of them & also on high potential 501 to 2,000 population
category villages. The larger villages are more urbanized & so are the peoples attitudes.
Whereas those located in the remote areas are rooted in traditional values. FMCG
companies can cover 1, 00,000 villages by appointing 2,000 stockiest in towns of
population OF 20,000 each. Stockiest can conveniently distribute products to 50 locations
around their town.
Approaches for segmenting the rural markets of India
Based on size of village population: - ORG-MARG has suggested the

classification of the rural belt in there board & simple categories
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class-1 villagers with population over 5,000

Class-2 villagers with population between 1,000-5,000
Class-3 villagers with population less than 1,000
For marketers who are entering the rural market for the first time, Class-1 villagers
are an ideal target market. However the FMCG organizations, which were operating
in the rural market for a long time, are now developing marketing & distribution
strategies to move to class-2 targeting class-3 market with traditional distribution
channels is not available as cost of distribution comes out to be higher than returns in
this market. Therefore, organization like HLL are developing alternative channels like
project Shakti to target market
Based on location with respect to nearby town:-

Villagers near urban centers: - These villages because of their proximity to the urban
areas are somewhat urbanized. Their residents education profile, shopping habits, &
brand choices resembles to a great extent to make most of purchases from the nearby
towns.
Villages in developing districts: - These are somewhat developed villages with

consumers being aware of various marketing promotion to some extent. The income
profile of these villages is good enough to make them potential market for branded
goods Immobile & self-sufficient Asiatic villages. These are the remote villages
located in the less developed districts. The income & education profile of consumers
in there villages is not very attractive from the marketing point of view. The
connectivity & infrastructure availability is also very minimal. Most of these villages
can be classified as media dark.
Based on size of farmland:-The generally followed classification on basis of

size of farmland like this
Marginal farmer:- holding up to 1.0 hectare

Small farmers:-holding 1.0-2.0 hectares
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Semi-medium farmers:-holding 2.0-4.0 hectares

Medium farmers:- holding 4.0-10.0 hectare
Large farmers:- holding 10.0 hectares & above
Based on income:-Rural rich consumer, concentrated rich customer, Scattered

rich customer, Rural consumer around urban area, Rural consumer above
poverty line, Rural consumer below poverty line,
NCAER has also classified the Indian consumer into the following five classes on the
basis of their propensity to consume.
Destitute: Have income less than Rs.16, 000 p.a. (market for basic, economical &
essential commodities)
Aspirants:-Have annual income in the Rs.16, 000p.a.-Rs. 22,000 p.a. ranges (market
for basic durables)
Climbers:-Their income is between Rs.22, 000-Rs.45, 000p.a. (market for
consumables & consumer durables)
Consumer:-Their income is between Rs.45, 000-Rs.2, 15,000p.a. (Market for
consumables & consumer durables)
Very rich: - Those have income higher than Rs.2, 15,000p.a. (Market for international
brands)
Segmenting the markets: -

Nirma Vs HLL
Until about twenty years ago, the rural market in India was considered as homogeneous
mass. The decade of the 1980s was a significant one for Hindustan Lever Limited (HLL),
when the giant & undisputed market leader in the detergents (Surf) in India suffered
significant losses at the hands of new & small firm, Nirma Chemicals, Nirma
immediately caught the fancy of middle & lower-income customers, who were finding it
difficult to make both ends meet with their limited monthly income.
Page 36
Nirma was the lowest priced branded washing powder available in grocery &
cooperative stores. The middle class housewife was happy as she could now choose a
lower priced washing powder against Surf, which was beyond her budget. Nirma also had
an impact on upper-middle class & higher-income families, who choose Nirma for
washing their expensive clothes.
Around 1984, HLL decide to take a fresh look at the market. Research conducted across
the country revealed that different income group of customers had varying expectations
from detergents & washing powders. Thus to counter attack from Nirma, HLL launched
Sunlight (Yellow), Wheel (green), & Rin (blue) detergent powders for different market
segments. This strategy for segmenting the market helped HLL win back parts of its lost
market. Nirma had won the first round by introducing a low-priced product, for the
highly price-sensitive Indian market.
Mass marketing: -
Initiated by leading FMCG companies HLL offered only one detergent powder, Surf, to
all customers but when Nirma entered the market & grabbed a sizeable market share of
low-income households, HLL woke up & introduced Wheel.
Colgate-Palmolive successfully marketed the same Colgate toothpaste to all consumers in
urban & rural markets till recent years. However as the rural market started to evolve &
consumers became more demanding, Colgate introduced Cibaca.
Colgate 10-gm sachet of toothpaste was designed in 2000 keeping the rural consumer in
mind. Britannia introduced smaller packs sizes of Tiger biscuits in 1998 at Rs.4, Rs.2,
and Rs.1
Micro marketing:-
Anmol-Mustard oil: - Dabur launched Anmol, mustard & amla-based hair oil, to target
rural consumers in the northern markets who used loose mustard oil. A small 50ml. pack
priced at Rs.10 was introduced.
Basis of Segmentation:-
Geographic: - 1) Region: - East, West, North, South
Page 37
2) Village size: - <500, 501-1000, 1001-2000, 2001-5000, 5000>

3) Density: - low, moderate, high
4) Climate: - summer, rainy, winter
5) Culture: - 56 socio-cultural regions (e.g. Avadh, Bundelkhand, Rohilkhand, Purvanchal
& Braj in Uttar Pradesh
Demographic: - 1) Age & life cycle: - children, teenager, young adults, elders, seniors
2) Family structure: - nuclear, joint
3) Gender: - male, female
4) Income: - destitute, climbers, middle, high
5) Landownership: - landlord, rich farmer, small or marginal farmers, agricultural
labourer
6) Education: - illiterate, semi-literate, literate
7) House type: - pucca, semi-pucca, kuccha
8) Occupation: - farmers, wage earner, salaried
9) Religion: - Hindu, Muslim, Christian, Sikh, parsi
10) Caste: - upper caste, lower caste
Psychographic: - 1) Social class:- upper, lower, middle

2) Lifestyles: - trendsetter, follower/adopter, tradionalist
3) Personality: - authoritarian, ambitious
Behavioural: - 1) Occasion: - festival, mela, jatra, weekly haat

2) Benefit sought: - quality, convenience, value for money, service
3) User status: - non-user, ex-user, first time user, regular user, potential user
4) Usage rate: - light user, medium user, heavy user
5) Loyalty status: - strong, weak, non-loyal
6) Place purchase: - village shop, haat, nearby town, mela
Page 38
Dabur has segmented its toothpaste market on the basis of economy & flavor positioning
Lal Dant Manjan for low-income groups, red toothpaste for middle-income groups & Red
Gel for relatively sophisticated & rich rural consumers.
Rural market segmentation
Segment coverage examples
Segmentation Marketing type Coverage strategy Products examples
Zero Mass undifferentiated Soaps, face
powder, ,condoms,
consumer goods
Substantial Segment Differentiated Seeds, fertilizers,
agri-implements,
smaller packets of
FMCG
Selective Niche Concentrated Internet, computer,
mobile phones
For rural marketing of FMCGs the segments of rural market is Cash Starved. Hence tooth
paste, shampoo, soaps, toothpowder are all required in smaller packets that can be sold in
cities.
Segmentation of Biscuit market:-
Biscuit market segments
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Sweet Salty Semi-sweet Sweet & salty
Glucose Milk Biscuits Arrow root Marie
Special segment would consist of

1) Creams/wafer cream
2) Calories
3) Health
Estimated relative share of various types of biscuits:-

Glucose: - 35% Milk biscuits: - 17% Arrow root: - 18% Cream biscuits: - 12%
Maries:-11% other:-07%
About 60% of biscuit market is in the hands of the organized sector
Source: - Probity Research report
TARGET MARKETING
Developing a targeted marketing strategy:-

1) Define relevant market
2) Analysis of characteristics & wants of potential customer
3) Identify the basis for segmenting the market
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4) Define & describe market segments

5) Analyses competitors position
6) Evaluate market segments
7) Select market segments
8) Finalize marketing mix(es)
Identifying & selecting target market:-

This is one of the toughest tasks of rural marketer. After he has segmented the rural
market, he has to consider a combination of factors (for which the availability of
authentic data is not easy even in the present day information age) to decide which rural
market segments an organization would like to target % the ones which are not fit to be
targeted some of the feature important for this analysis as follows:-
1) Social-cultural, Economic development & infrastructural environment of different
districts.
2) Density of population in different villages.
3) Heterogeneity & homogeneity of population across regions.
4) Mobility, media availability & cost of access to the area.
5) System of attraction.
Selecting the target marketing strategy:-

1) Undifferentiated marketing: - It is a marketing strategy created by the same marketing
mix product, price, place & promotion for all markets. The firm considers the target
market as one & the same. It requires extensive distribution in the maximum number of
retail outlets for ex. Revlon, Pepsi & Sony.
2) Concentrated marketing: - It involves devising a marketing mix on one product, one
segment principle. This strategy can be used by small companies also because small
companies can create niches in one product, one segment for ex. Cosmetics Lakme.
3) Differentiated marketing: - It involves devising multiple marketing mix offerings For
Ex. Unilever & Proctor & Gamble.
Market targeting for different products:-
Page 41
Company Brand Name Target Markets

P&G Ariel Micro System All housewives, household income of Rs.8,000+
Godrej Soaps Evita Soap Women who care for their complexion
HLL Fair & lovely lotion Skin care conscious urban women
Coca-Cola Thums-up Youth market
Coca-Cola Limca Thirst-quencher
Coverage of segments:-
Segmentation Type of marketing Coverage strategy Example
Zero Mass Undifferentiated Ghari, Medimix
Substantial Segment Differentiated Vicco Vajradanti, Colgate
Selective Niche/Single segment Concentrated Multiple brands of soaps of
HLL
.
Winning markets through effective segmentation & targeting:-
When Brooke Bond Lipton India Ltd. (now HLL) decided to expand its branded tea into
the largely unbranded loose-tea segment in the rural market, the company explored the
buying, consumption & other habits of all tea consumers in order to identify a cross
section of people united by common behaviour traits only after conducting this extensive
research did HLL conceive A1, the new brand for this market, as a bundle of benefits
designed to meet the needs of this segment.
Naturally, pain-vanilla demographic & usage data would not have helped in carving out a
well defined niche so HLL created its own profile of would-be consumers, both urban &
rural. HLL began by collecting photographs & video clips of people across the country
who buys loose tea in order to study their lifestyle, in general & their tea-preparation &
tea drinking habits in particular, including the times in the day when they drink tea, how
they serve it, & the family members who are regular tea drinkers, alongside, HLL tracked
other items of food & drink that those people consumed, the soaps & detergents that they
used & how they spent their leisure so as to understand just where tea & its consumption
stood in their matrix of the needs.
The objectives were first to understand exactly what bases of segmentation could be used
to differentiate consumers & second to identify the key issues for the consumer groups. It
Page 42
was crucial to come up with useful definition of the segment under review. It would have
been too simplistic to use price as a factor to define the segment. As a result of this
elaborate exercise, HLL found a simple but highly effective idea that it could use to
define its segment: the desire for strong cup of tea. Cutting across geographical, cultural,
income & age groups, this need emerged as a unifier for many tea drinkers. So HLL used
this as the one overriding characteristic that would distinguish its chosen niche from
characteristics that would distinguish its chosen niche from the rest of the market.
Page 43
MARKET POSITIONING
Positioning is the act of designing the companys offerings & image so that it occupies a
distinctive place in the mind of the target segment. Positioning involves:-
1) Identifying the unique feature of the product (USP) as well as the differences of the
offer vis--vis the competitors offer.
2) Selecting the differences that have greater competitive advantages
3) Communicating such advantage to the target audience.
Himani positions its Sona Chandi Chyavanprash on the two plat forms of the healthy
body & a sharp mind. Thus it captures the pleasure of the contrast.
Ghari detergent identified a gap in the low price- high quality quadrant & positioned its
brand accordingly; as a result it quickly became a rural super brand, leaving behind rival
brands like Wheel.
Product differentiation: - Coke introduced the Chota Coke at Rs.5 for rural. Colgate
introduced a herbal version of its toothpaste using the positioning of natural fee
preferred in rural areas. Meswak, Neem, & Babool toothpastes also followed a similar
positioning strategy.
People: - the endorsement of Coca-cola by Amir Khan (addressed as villager) or of Sona
Chandi Chyavanprash by Sunny Deol, brings huge differentiation to the product image &
helps in pushing the sales of the product decides which positioning to promote:- for rural,
the positioning statement should focus on the generic benefit(s) for the product Sprite
bujhaye pyaas baki sab bakwas & handa matlab Coca-colaare two advertising line or
jingles suitable for rural consumer.
HLL plans rural campaign to reposition Lifebuoy:-

FMCG major Hindustan Lever Ltd Embarked on a massive rural campaign using the
concept of hygiene as a platform to reposition its leading brand Lifebuoy.
The repositioning of the 107-year-old Lifebuoy has been done in a bid to drive growth in
a sluggish soap market.The new Lifebuoy is a completely new product with a new
formulation, fragrance & lather profile. It also represents a shift in positioning from a
Page 44
male soap to a family soap. The repositioning of Lifebuoy was necessitated by a shift in
market trends. Earlier consumers had little or no choice & needed a basic cleaning soap,
but today consumers in rural India can choose from much wider section. The query of
rural consumers is, Why do I need Lifebuoy when all soaps clean? It was indicative of
decline of the brand, prompting HLL to launch Lifebuoy Active & Lifebuoy Extra Strong
in mid 2001. Lifebuoy is no longer a carbolic soap with perfume. It is now toilet soap
with a different health fragrance. With this launch, the carbolic segment has been wiped
out, Lifebuoy previously accounted for 95% of this segment. In the process of making the
switch, HLL changed everything that Lifebuoy had once stood for perfume, formation,
size & shape. Every element of the communication strategy was also changed.
The first phase of communication strategy was to tell customers that Lifebuoy has
changed from an earlier focus on man. The concentrated has now shifted to the family,
with the message that Lifebuoy is the right soap for effective protection against disease-
causing germs.
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MARKETING MIX 4 Ps P for PRODUCT
The concept of marketing mix, A series of interconnected & interdependence marketing

issues that need to be considered together was first developed by marketing academic,
Neil Borden, in the 1950s. In 1960s, Jeriome McCarthy, Professor, Harvard Business
School, elaborated the concept of four Ps (McCarthy 1960)
Marketing Mix refers to the set of actions, tactics, tools or variable that a company uses
to promote & sell its brand or a product in a market.
Product refers to anything that is capable of or can be offered to satisfy a need or want.
Product for the rural market must be built or modified to suit the lifestyle & needs of
rural consumers. Rural consumers like to buy products for need-based consumption. The
product must also prove to be useful & easy to use.
In the past, FMCG products percolated into rural areas from urban areas automatically,
but they were not specifically designed for rural areas. But if the organizations want to
develop demand in rural areas significantly, then they need to modify the existing
products to cater to the specific needs & tastes of the rural markets through innovative
designs. New product development is a sequential process of finding ideas for new goods
or services & then transforming them into commercially viable products or services that
can be launched in the market for serving the needs of customers, at profit.Is there a need
to redesign or modify products sold in urban areas to suit the rural consumers, or can the
same products be sold as they are?. The answer to this question is both yes & no, since it
depends upon the product & its characteristics while there may not be much
maneuverability for redesign or modification in the case of some products, it is possible
in the case of several others like Paisa packs of tea costing only 25ps. (which is
reasonably sufficient for two cups of tea), 5gram Vicks vaporub tin, small size 75 gram
Lifebuoy soap, 25grams pouch of Colgate toothpowder costing only 3 rupees, small
denomination packets of some washing powders like Nirma, Sachet packs of shampoo
costing a rupee, low priced cigarettes like Hero ( an ITC brand introduced in 1993 which
was clearly positioned to upgrade beedi smokers), cough syrups in sachets, Vicks singles
cough drops & others.The factor to be considered while redesigning or modification are: -
1) the specific requirement of consumers 2) their habits of usage 3) their purchase habits
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4) their income levels 5) customs, beliefs, taboos etc. a few years back, Colgate
Palmolive introduced small tubes of toothpaste popularly known as Colgate ka chhota
packet. Yet another example is that of a cigarette from ITC known as Hero. This was
priced at at 15 paisa per sticks only. The purpose of this cigarette was to upgrade the
beedi smoker to cigarettes while making the product available at a price comparable to
that of beedi. Similarly Pepsi & Thums-up have introduced 200ml. bottles for Rs.5 only
called Chhota Pepsi or a Thums-up. In fact the rational for introduction of 200ml. bottle
is interesting. It was observed that two rural consumers shared a 300ml. bottle costing
Rs.8 or 9. They could not afford a bottle each. By introduction of a 200ml. bottle costing
only Rs.5, it bought the product within the reach of rural consumer as well as increased
volume of sales. Two persons can now consume 400ml. between them instead of the
earlier 300ml. at a nominally higher cost. New product Cadbury launched Chocobix, c
chocolate-flavoured biscuit based on the consumers insight that rural mother opt for the
more affordable biscuits rather that the more expensive chocolate bars for their children
MARKETING MIX 4 Ps P for PRICE
Price: - Rural consumers are price sensitive. They are price conscious & frugal. Village
retailers charge more than Maximum Retail Price (MRP) by justifying that they spend
time & money to fetch the products from distributors & wholesalers. Thus it helps to seek
higher margin. Coca-Cola found that it was not just Pepsi that they are competing with in
the rural market but also nimbu pani, jaljeera & other drinking option to refresh the
customer. Therefore price of substitutes must be studied along with the price of
competitor before & after the launch price of a product.
Low Volume-Low Price: - This strategy of reducing prices by reducing the package size
in order to make it appear more affordable, is delivering very good result for a large
number of FMCG product categories, in the rural markets of India.
Ensuring price compliance: - Rural retailer, most of times, charge more than MRP. The
manufacturer has to ensure price compliance through promotional campaigns, as was
done by Coca-Cola (The Ad campaign in which Amir Khan insists local retailers to
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charge Rs.5 not Rs.6 by saying Panch) or by ensuring the availability of products at the
retail outlets directly.
Pricing policies in rural areas:-

1) Odd pricing: - The term odd pricing is used in two ways. It may be a price ending in
an odd number of prices just under round number. Odd pricing is adopted by sellers of
specialty goods. For example A shoe manufacturer price his product at 99-95 etc.
2) Psychological pricing: - In this method of pricing the price is fixed at a full number.
The people who set such pricing feel apparent psychological significance from the point
of view of buyers. For example it is believed that are certain critical points at prices such
1.5 & 10 studies conducted proved that change of price over certain range has little effect
until some critical point is reached.
3) Customary price: - Customary prices are fixed by custom. For ex, sweet manufacturer
price their products in such a way that a particular variety of sweets or soft drinks are
sold at approximately the same price. Usually such a pricing is adopted by chain stores.
4) Pricing at prevailing prices: - This type of pricing is resorted to meet competition.

Such a pricing is also termed as Pricing at the market. This is because a price above
those of competitors would sharply bring down sales while lower price would not
significantly increase them.
5) Prestige price: - Some consumers are of the attitude that the quality of the product
depends upon its price. Generally prestige pricing is applied to luxury goods, where the
seller is successful in creating a prestige for his product. In such case sales would be less
at lower prices. Customers may fear that at the low prices it can not be of good quality &
will actually buy more at some what higher prices than they would at lower prices.
6) Price lining: - The policy of price lining is found among retailers. This type of pricing
is related to both psychological & customary prices. There the pricing decisions are made
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only initially such fixed prices remain constant over long periods of time. Any changes in
the market conditions are met by adjustments in the quality of merchandise.
7) Geographic pricing: - When the manufacturer serves a number of district regional

markets. This policy is followed. He can adopt different prices in each area without
creating any ill-will among customers.
8) Dual pricing: - If manufacturer sells the same product at two or more different prices,
it is an example of dual pricing. This is possible only if in the same market different
brands are marketed. Railways have adopted dual pricing. Here for the same distance of
travel in the same vehicle. The services are sold to passengers at different prices under
different classes. This is also referred to as discriminatory pricing.
9) Administered pricing: - here the products are priced for the market on the basis of the
policy decision of the seller cost, competitive pressure, the law of supply & demand is
not at all considered here. The administered prices usually remain unchanged for
substantial periods of time.
10) Monopoly pricing: - New product pricing is in reality monopoly pricing; since
competition is absent the seller has a true hand in fixing the price. The principle on which
this pricing is based is What the traffic will bear
11) Skimming pricing: - This is also known as Skim-the-cream-pricing. The process

involves in setting a very high price for a new product initially & to reduce the price
gradually as competitor enter the market. In the initial period until the product is accepted
by the customer this type of pricing is adopted; a) When sales volume of the product is
very sensitive to the price b) When large volume of sales is to be affected. c) When the
product faces a threat from competition. d) When stability of price is required.
12) Expected pricing: - Under this method, the price that will be accepted by the
customers is found out. Usually a fixed price can not be decided in advance & hence
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price range is offered. The response of customers to price is analysed & later a price is
fixed.
13) Sealed bid pricing: - This method is followed in the case of specific job works.
Government contracts are usually awarded through system known as tenders. This would
be contractors anticipate the expected expenditure & offer a price. The minimum price
quoted is accepted & the work is awarded to the party.
14) Negotiated pricing:-Industry suppliers adopt this method. Manufacturer who require
goods of highly specialized & individually designed nature often negotiate the only when
fix the price for example in case of automobiles, various components required by
manufacturer are entrusted to suppliers. Under such circumstance the prices are
negotiated & fixed.
15) Mark-up pricing: - In order to establish a sale price, this method is adopted by
wholesalers & retailers. When the goods are received, the retailer adds a certain
percentage to the manufacturers price to arrive at the retail price e.g., an item that cost
Rs.50 is sold for Rs.600. the mark-up price is Rs.10.
Price: - There is a need for low priced products or redesigned/modified products whose
unit cost will be low. Mostly, this has been achieved by reducing the package size (paisa
packs in tea, smaller packaging of toothpowder or Vicks cough drops etc.). Similarly
cheaper blends of tobacco have been used to make cheaper blends of cigarettes like Hero,
Blue Bird, and Honey Dew & Cavenders. These cigarettes are priced low to make them
an effective substitute for beedies. One of the brands of Hindustan Lever tea which
contains tea, chicory & Tapioca flour illustrates this concept. Tea costs about Rs.100 per
kg while chicory & tapioca flour costs only Rs.40 & Rs.10 per kg respectively. By
substituting 30% of tea with lower cost material, the overall price can either be brought
down or maintained at tomes of rising prices.
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Affordability: - Godrej recently introduced three brands of Cinthol, Fair Glow, & Godrej
in 50-gm. Packs priced at Rs.4-5 meant specifically for Madhya Pradesh, Bihar, & Uttar
Pradesh the so called BIMARU states.
Hindustan Lever among the first MNCs to realize the potential of Indias rural market,
has launched a variant of its largest selling soap brand, Lifebuoy at Rs.2 for 50gm, the
move is mainly targeted at the rural market. Coca-cola has addressed the affordability
issue by introducing the returnable 200ml. glass bottle priced at Rs.5. the initiative has
paid off. Eighty percent of new drinkers now come from rural market. Coca-cola has also
introduced Sunfill, a powdered soft drink concentrate. The instant & ready to mix Sunfill
is available in a single-serve sachets of 25gm. Priced at Rs.2 & a multi-serve sachets of
200gm priced at Rs.15.
Godrej Consumer Product, which is trying to push its soap brands into the inferior areas,
uses radio to reach the local people in their own language.
Price initiatives in rural market: - Nestle

Nestles rural initiative have largely been based on price-led initiatives brands such as
Maggie noodles & Kit Kat chocolates have been priced at Rs.5 & a few other candy &
chocolate brand are priced at Rs.2 per unit. There prices point not only help Nestle reach
more retail formats in urban market but also help in making inroads into rural markets,
currently rural markets account for below 10% of the food majors revenues.
MARKETING MIX 4 Ps P for PLACE
Place: - Place, the third P, is the major reason behind the evolution of rural marketing as
a distinct discipline. Distribution can make or break company. In the FMCG industry in
India, specially, companies have to distribute their low value, high volume products to
cover 10lakh retail Outlets or point of scale. The most successful FMCG companies have
the biggest networks made up of stock points, distributors or C& Fs (Carrying &
Forwarding Agents), redistribution stockiest, wholesalers & retailers. Along with the
efforts of wholesalers & dealers, companies need to have direct point of contact with
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retailers & sub-retailers in rural areas if they want top have strong network. If you are
bound to lose your market to competitor, says Sameer Singh, Wilkinsons Marketing
Managers.
A vast network of 1.38lakh rural post offices can be trapped imaginatively in order to
target consumers in remote villages. Emami Ltd. has tied up with the Post & Telegraph
department to place its product across 5000 Post Offices. The Pilot project has been
initiated in Maharashtra & eventually, it wants to reach all the 1.05lakh Post Offices
across India. Personal selling network is another very successful distribution channel
being developed by companies like HLL. It adds a personal touch to the marketing, as the
salesman is residents of the village & community itself, making it easier to sell the
products & maximize sales for the company.
In 1989 under Operation Harvest A van covered six villages a day, 36 villages a week or
144 villages in a month. This is because HLL assisted the Rs. In extending their
distribution network beyond the villages already covered. The villages covered under the
scheme of at least 2,000 person & those villages which generated consistently sales of at
least Rs.2, 000 during the visits were included in the regular distribution programme
under IDC. This was followed by Operation Bharat which concentrated on villages with
at least 1,000 people & offered potential. Self Help Group (SHGs) is estimated about
6lakh SHGs are now functioning in the country with a heavy concentration in the south.
HLL gives a margin of 10% to SHGs as opposed to only 8% to retailers. A village having
a population of 1,000 persons is assumed to spend Rs.4 per head per month on products
similar to HLL products. If 50% of Rs.4 spent goes to HLL products, the sales per month
by a SHG will be Rs.2, 000. A 10% margin on sales will be Rs200 which will accrue to
SHGs funds. This distribution programme is called Project Shakti
In villages beyond the reach of distribution system, some shopkeepers make their own
arrangement for the procurement. Most of them commute to the nearby town to get their
supplies to make up for the expenses thus incurred; they charge the consumers more than
maximum retail price.
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MARKETING MIX 4 Ps P for PROMOTION
Elephant march:-The erstwhile Brooke Bond, March major tea making company,
periodically arranges for an elephant march through the villages. The ITC also adopted an
innovative promotion campaign for their low priced Hero blend of cigarettes- their
promotion strategy was a three day affair. On the first day a person on a cycle, cycle
rickshaw or auto rickshaw goes through the villages announcing on a public address
system that Hero aa raha hai- Hero is coming. This is primarily to create interest &
arouse the curiosity of the rural consumers. On the second day, an elephant dropped out a
large sheet with the logo of Hero & a huge cutout of Hero. Cigarette packet went through
the village distributing free samples of the product to induce trail. The third day saw a
video van coming into the village playing popular movie songs to attract crowd. The
message about the product was disseminated among the rural consumers.
Rural van: - Colgate-Palmolive has been using van promotion in rural areas. Their main
objectives were direct consumer contact, demonstration of the product, and sample to
customers & spot sales. The campaign was more for selling the concept of Oral
Hygiene to the rural consumer. In a way this could be called as generic promotion of
toothpowder, toothpaste, & toothbrush apart from going to villages, they also selected
places of mass gathering like shandies, where young children were asked to brush/clean
their teeth with the paste/powder & tell others about the feeling of freshness they
experienced. Simultaneously, salesman approached the village shops & motivated the
shopkeeper to stock their products.
The rural van promotion has been made simpler by agencies like Sampark Marketing &
Advertising solutions, Video Express & Video-on-Wheels.
POP Promotion: - Van promotion in rural areas by both owned & hired vans, is widely
adopted by companies to create awareness for their products-consumables & consumer
durables. Either POP materials are supplied to the shops when the distribution van visits
the villages or they collect the same when they go for purchases. One can find wall
posters, paintings & danglers in rural shops also.
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Interactive Games: - Thums up campaign by Video on wheels.

The aim of campaign was to take Thums up deep into the rural markets. Participation in
the snakes & ladders game was open only to those who bought a bottle of Thums up. This
induced spot sales as well as trials among those people who had not tasted the soft drink
before. Attractive gifts were offered to encourage audience participation.
Daburs Pinball Game: - Dabur designed a pinball game in which the ball was in the
shape of the Dabur Chyavanprash container & the pins represented germs which would
be destroyed on taking the health tonic. People were invited to slip the ball in & see how
many pins were punctured.
Major rural sales promotion tools for FMCG products are

Free samples, Cash rebates or discounts, Price packs or gift attached to packs,
Gift, Contests, prizes, games, Product warranties, free trials, Point of purchase or sales
counter displays, demonstrations, Promotion of brands & Trade promotion to stimulate
wholesalers, retailers & field workers with gifts & awards.
RURAL MARKETING MIX
Branding: - rural buyers seek value. They are equally conscious of loosing face in public.
The Izzat notion is very important for them. Therefore rural audience is more cautious
while purchasing a product that will be seen by others. Thus they like to stick with
products & brands that have higher social acceptance.
According to Harish Manawani the then Vice President of Hindustan Lever,
International brands need to be relevant in terms of perceived image, performance &
value if they are to succeed in India market. Higher brand loyalty among the villager;
once a brand finds acceptance in a community, village, region or a state it becomes very
difficult to replace that brand.
Packaging: - The decision on packaging is influenced by characteristics of consumers,

i.e. affordability, cultural preferences, usage conditions & ability to read. smaller packs
Page 54
provide the weaker sections with an opportunity to purchase same minimum quantity of
product by paying a lesser amount of money. It helps in reaching those customers. Who
dont have any savings but earns daily basis to meet their daily requirement.
Colgate first made sachets of toothpowder, as required by the income stream. Since many
households in rural areas dont have proper bathrooms & only have a window or a small
space to keep such things- Colgate put a cap on the sachet for convenience of storage.
Being illiterate rural population recognize its product by its packaging by watching on
television.
SKU: - Organization should maintain a smaller number of stock keeping units (SKU) for
the rural market. As the rural retailer has a limited working capital, he might not be in
position to stock all the SKUs in a particular product category. Deciding upon the
optimum number of SKU is critical for achieving success in the rural markets. Reusable
packages & small unit packages stand a good chance of acceptance in the rural market.
In case of mass media when it comes to rural market, two out of five Indians are not
reached by any media. TV, Press, Radio & Cinema put together. Doordarshan (DD)
telecast network covers at least two third of entire country with coming of the DTH
network facility, the rural rich can be targeted in a better way by television.
Radio continues to be the primary source for entertainment in rural market. News
programmed is widely listened to in rural areas. A radio can be played on without
electricity, on batteries; it is a very effective medium in the rural areas. FM radio
continues reach villages, towns, semi-urban areas surrounding cities, metro cities. The
relevance of the print media for rural communication needs careful examination. The
literacy level is low in rural areas as compared to urban areas. The Press advertisements
can target opinion leaders who can carry forward the message to the masses. Almost three
fourths of the rural adult population view cinema in the southern region, which also
accounts for nearly half of the cinema viewers in the country. So it can be very effective
media to promote products & services in the rural areas of the southern states.
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RURAL MARKETING STRATEGY
Product strategy: - Value consciousness is a big driver for the rural market, consumers are
extremely aware of the equation of price, quality & image. Understanding this fact,
Britannia came with the concept, Eat Healthy, Think Better (Swasth khao tan man
jagao.) This moved Britannia, from standing for biscuits & source of quality to a brand
that stood for healthy food for health conscious Indian consumer.
Small Size packing: - The low per capita income, non-availability of regular pay & cash
forces the rural consumer to buy in small packets various products. The examples can be
explained in plenty. FMCG: - Almost all FMCG goods manufactured have come out with
smaller packets & low price varieties. Toothpaste is available in 10gm, 25gm & 50gm
packets/tubes. Soap powder is available for Rs.2,Rs.5,1/4kg,1/2kg packets. Both soap
cakes are available in small sizes of 25gm & 50gm in addition to the standard 75gm
sizes. Even Vicks ointment & tablets are available in small boxes & small packets.
Toothpowder is also available in small paper products for easy salability
Low-priced package & product:-Big & small companies have adopted on unwritten
policy to dump second grade quality to sell at loose prices in the rural market product like
ghutka, cold drinks, biddies cigarettes, tea & coffee, powders came to the rural areas in
smaller packets & lower rates than those sold ion cities the quality will be medium or
lower level loose tea is packed and sold in different brand names suiting the rural public.
The established brands cannot do this and hence they try to sell the quality product in
very small packages. They can always make up marginal losses in rural areas by selling
high priced product in cities
Application of value engineering: - This is tried & tested technique adopted to evolve the
cheaper products by substituting costly raw materials with cheaper ones. This technique
has been successfully applied in the case of Hindustan Levers tea blend which contains
tea, chicory, tapioca flour. Tea cost about Rs.100 per kg. Chicory costs about Rs.40 per kg
& tapioca floor about Rs.10 per kg. By substituting chicory to the extent of 20% &
Page 56
tapioca flour to the extent of 10%, the price of tea blend is kept low. Chicory is well
known adulterant in coffee powder & tapioca is starch & forms the staple food in certain
region of the countries.
In 70s Britannia Industries introduced biscuit called Probisk with Soya protein, which
was for cheaper to other biscuits, while the nutrition content was the same. Their biscuits
were slightly dark in colour than other because of their Soya content.
Pricing strategy: - FMCG companies can cut cost to maintain the price points through
reducing the net weight of the products or doing goody with freebies & promotions.
Rupee 5 price point: - The current craze for Rs.5 positioning could be because of Cokes
success in promoting the Paanch strategy. Brooke Bond pack was available earlier in 5
paisa, later 10 paisa, 25 paisa & 50 paisa & then with inflation it becomes Rs.1 pack.
Now it is the time of Rs.5 pack. HLL sells for Rs.5 are Ponds talk, Ponds Cold creame,
Rin, Taaza, Fair & lovely & Lux. The price point also helps branded FMCGs, which are
battling fakes from unorganized sector. Rs.5 price point leads to growth in user base of
brands & increased category penetration for those who have introduced such packs.
Regionalisation of Advertising strategy: - Unique promotions need to be designed as what
works in north may not in the south. At times even dubbing the commercials in local
linguistics may not work. Emami has Madhuri Dixit & Amitabh Bachchan as brands
ambassadors but for Andhra Pradesh, it signed Chiranjeevi for the same. The success of
Thanda matlab Coca-Cola campaign, which was aimed at the rural market, is a case in
point.
Low priced shampoo: - Cavinkare realized that for a family a five members at Rs.2 per
sachet & a minimum of four hair washes per person per month would mean an rs.40 send
for shampoo alone. Many rural families can not afford this expense.
The feedback was that of the cost of hair wash could be reduced to Rs.2 per person per
month. Villages would not be averse to trying a shampoo, i.e. a 50 paisa pack. It was a
challenge for the company to develop a formula & packaging to bring down the cost so
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radically. When the 50 paisa sachet was lunched in 1999 the Chic market share was 5.6%,
this rose to 23% by 2003 out of the total sale of Chik today, 65% comes from rural.
The pricing strategy of regional brands: - Ajanta clock manufacturing company has
understood the nuances of pricing associated with a stagnant, category such as toothpaste
& decided to adopt a discount pricing strategy akin to what most regional players seem
to be doing. It has pegged its toothpaste price at a discount of roughly 60% compared to
the bigger brands from Colgate & HLL.
Distribution strategy: - According to Pradeep Kashyap,M.D., Marketing & Research

Team(MART) success in rural marketing depends on getting the distribution & pricing
right. Even expensive brands such as close up & Marie biscuits were doing well because
of deeper distribution. Brand has to be present at the right place. jo Dikhta hai, wo Bikta
hai.(What is seen, sells) Many of the brands are building stronger rural bases without
much advertising support. Being first on a shelf in there product category & developing a
privileged relationship with the retailer is a source of competitive advantage to consumer
goods companies. And usually the brands that are first on shelves become synonymous
with product category & are difficult to dislodge, thereafter. For example Maggi noodles
reached the rural shelves before anyone & remains the market leader ever since. Delivery
vans are provided by the organization like Coca-Cola, Pepsi, Amul to reach the rural
masses for their products. Proctor & Gamble had tie ups with Godrej, Marico Industries
& now it is planning one with Nirma for distribution of Camay soaps, Godrej tea has tied
up with Jyoti lab to use its extensive distribution network to promote its soft drink
concentrate in rural areas of Uttar Pradesh, Rajasthan, Maharashtra, Gujarat & Tamil
Nadu. Fluency encouragement in local language & employment of rural youth play a role
of word of mouth communication for FMCG companies. Harish Bijoor, renowned
Marketing Consultant puts it Advertising is easy but the rural marketing is a donkeys
work. Organisations like Vicco Vajradanti, Colgate toothpowder, Dabur Lal Dant
Manjan that respected habits of the rural people by providing toothpowder as substitute
to something they were putting on their palm & use their finger to clean teeth created a
relatively a easy acceptability of the product.
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Coverage of villages based on the population strata a company decides to reach the
villages with a population of 2,000 & above, then the number of villages to be covered
work out to 76,291 (13%) & the proportion of the rural population covered will be 48%.
Further reaching out to the villages with a population of 1,000 & above will increase the
number of villages to 1, 90,686 (32.8%) but the population covered will sky rocket to
73.7%. In case it is decided to cover villages with a population of 500 & above, the
number of villages will be 3, 35,684 (57.8%) but population covered will be whooping
99.4%. It is possible to run distribution vans to the villages with the increase in physical
communication facilities due to programmes like Pradhan Mantri Gram Sadak Yojana.
Some of the studies reveal that the bigger villages of above 5000 population are fairly
covered by the marketing people of various companies, manufacturing consumable &
durable products
Small village: - In order to reach small villagers, two types of strategies have to be
adopted i.e. reach all villages above 2000 population & reach all those within 50km.
radius of big towns & cities. This will help cover about 50% of the rural population &
even this extent of coverage means approximately 350 million populations & this is a
massive coverage. Very small villages below 500 populations can be ignored at this stage
as the output will not compensate the input. There should be distribution vans to cover
villages on fixed period (at least once a week) so that the shopkeepers as well as the
public are sure of supplies from the feeder centre, which will be nearby a town or city.
The village shop keeper of 2000 population in towns should be used as distribution
channel for shop keepers of very small villages around it. This is essential as some of the
smaller villages are not having motoratage roads.
Towns as Feeder centers: - Towns are frequently visited by rural people for education,
cinemas, purchases, medical treatment, & various functions. It will be convenient if the
town market is used as a distribution channel for various villages surrounding towns. One
or two traders in town need to be used as feeders to villages stores & also to sell directly
Page 59
to villagers coming to towns. This method is already working in many places & can be
further strengthened.
Promotion strategies:-
Think Global Act Local, Think in local Idiom..
There is need of advertising professional who can think like the rural people. Then only
can we have insights like Thanda matlab Coca-Cola, Anurag Madisons Chairman &
Managing Director, R. V. Rajan says Brand ambassadors for rural markets need to be
picked carefully as urban successes might not get replicated in the rural market that is
why Govinda in the Mirinda ad boosted the sales of the drink in the rural markets.
4 As of rural marketing mix are Affordability, Availability, Awareness, and Acceptability
Additional 4Ps are Passion a) Passion to earn Goodwill for the company. b) Passion to
serve & educate the consumer. C) Passion to give 100% to the rural marketing effort.
Place: - Whosever reaches the rural retailers shelf first is going to be successful in the
rural market. A rural retailer can stock only one or two brands for each product category.
His working capital & storing space do not allow him to store numerous brands. He also
knows his bargaining power as consumers do not have any other option except to buy
from him
Chhota Coke: - In what Coca-cola India terms a major initiative, launched through its
latest, Chhota Coke commercials, the company is taking its range of carbonated soft
drinks to all corners of the country. The intention to make Coke available & affordable to
all consumers, the strategy: pricing the 200ml bottle (Chhota) at Rs.5. the single-minded
objective of some of the latest Coke commercials has been to communicate the price
point. The company believes that the choice of Chhota, popular & endearing name
meaning the younger one in India, will work well for its smaller sized bottle since it is
also consumer speak for the 200ml bottle in the market. Since the predominant pack size
across the country continue to be the 300ml. bottle. It was felt necessary to specify that
the 200ml. pack is the new, smaller & younger offering from Coca-cola.
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The Chhota Coke (Rs.5 for 200ml.) strategy of Coca-cola saw a spurt in demand in
villages & cities as well as increased penetration. It forced rival Pepsi to bring down the
prices of its 300ml. packs & also introduce a 200ml. pack.
Competitive strategy: - Suitable product: - A Very different substitutes of products &

brands are available in the rural areas. Like Nimbu Pani is also a competitor to Coke
along with Pepsi in rural market. Freely available Ash is also a competitor for vessel
cleaning brands like Vim in the rural areas. Thus, competing with such like substitutes
that do not exist in urban setting requires special approach & very different promotional
message.
Sahndies/ haats /jathras /melas: - Professional rural promotion van operators include
Sampark marketing & advertising solutions, Video on wheels & Video express.
Normally these mobile vans spend the daytime in shandies & then move to nearby village
in the evening so that the nights can also be used effectively for promotion. This method
of promotion is very popular with several companies these days.
e) Special campaigns: Brooke- Bond carried out matches in rural areas with brand, music
& caparisonal elephants to promote their brand of tea. Colgate-Palmolives rural
promotion campaign on rural hygiene is another such example.
Packaging strategy: - Velvette shampoo introduced in sachets helped develop rural market
for shampoo & ushered in Sachets Revolution throughout India in all packaged goods
category. In Muslim dominated areas of Uttar Pradesh it sold the hair oil in green packs
but in Orissa, the same pack was sold in purple colour, whish is considered auspicious
there. Hindustan Lever found that retailers in some villages were cutting its large 100gm.
Soap into smaller pieces to sell & it introduced small 75gm. Soap.
Branding strategy: - In the packaged goods industries (FMCG), reduction of number of
brands & creating master brand to serve many segments by product variety or brand
extension is a strategic option adopted by many players. The high cost of building many
brands is significantly lowered if only few master brands have to be developed &
promoted for different but related products.
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Emotional attachment strategy:- The consumer research conducted by HLL for the
Lifebuoy brand found that there was need to change product or packaging since
consumer felt products as old fashioned, meant for the people doing dirty job. Hence to
connect emotionally; HLL came out with football team advertisement & emotional
branding was given fillip, another example of this is advertisement of TATA Salt Maine
desh ka namak khaya hai.
Logos & Symbols- strategy: - Use of symbols like muscle man for MRF, Lightening for
Rin, helps the rural consumers to identify brands at the time of purchase. Certain
successful brands in rural market have numbers, symbols & animals as brands: 555 soap,
Monkey brand toothpowder, Gemini tea (with elephant, Ghadi detergent etc. Tortoise
Mosquito Coils is another brand. Which was able to succeed with its brand name & loge
& which was well registered & received in the rural markets.
Deeper penetration of the market:- Britannia launched Tiger biscuits at Rs.1, Rs.2 & Rs.4
price point, which are much lower than the price point of its products like Glucon-D &
Marie Gold brands to make it more affordable in the rural market.
Hoardings/wall paintings: - This is also highly suitable for rural areas since the hoarding
or wall painting can include visuals with minimum write up. It has also been observed
that rural persons have more time to see & watch the hoardings than urban person.
The rule of the game: - To get a foothold in the semi-urban & rural markets, several
regional & some national brands enter with the objectives of taking on the competition.
They fight their marketing battles of selecting a particular brand often the market leader!
Then they deploy their entire marketing arsenal against this selected competitor. Ujala
used this strategy to full advantage against Robin Blue & now it commands nearby three
fourth of the Rs.2 billion Ultramarine blue market. Fairever did the same to fair & lovely.
Ghari detergent is doing the same thing now to Nirma & Wheel. Chiks share is close to
that of Clinic plus, the market leader in shampoos. Even the advertising & distribution
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strategies are designed with an eye on the companys opponent. This hurts the big
companies badly. HLL realized that its brand fair & lovely was in danger only after
Fairever had garnered a healthy market share within months of launch.
RURAL MARKET STRATEGY
Market-Leader strategies in rural areas:-
1) Expand the total market strategy: - The market leader firms can normally gain the
maximum when the total market expands. The focus of expanding the total depends on
where the product is in its lifecycle. This strategy can be used when a product is in the
maturity stage.
2) Defining the market share strategy: - When the leader firm tries to expand the total
market size, it must also continuously defend its current business against enemy attacks.
For ex. Coca-Cola must constantly maintain its guard against Pepsi- Cola.
Six ways for a market leader to protect its market position:-
a)Position defense:- This strategy involve pouring maximum firms resources into its
current successful brands for ex. HLL increased its ad-spend in Clinic & Sun silk
shampoos & gave heavy promotion through price reduction.
b) Flanking defense:- This strategy both guards the marketing position of leading brands
& develops some flank market niches to serve as a defensive corner either to protect a
weak front or to establish an invasion base for counterattack if necessary.
c) Preemptive defense: - This defense strategy manoeuver involves the launching of an
offence against an enemy before it stands on offence.
d) Counter-offensive defense: - This is a strategy of identifying a weakness in an attacker
& aggressively going after that market niche so as to cause the competitor to pull back its
efforts to defend its own territory.
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e) Mobile defense: - This strategy involves the leader broadening & expanding its
territories into new market areas by diversifying. Diversification into related areas is used
in mobile defense.
f) Contraction defense: - This strategy involves retrenching into areas of strength & is
often used in later stage of a product life cycle or when the firm has been under
considerable attack. For ex. HLL decided to concentrate on its core business areas, that is,
soaps & detergents, & has emerged as the clear leader in the toilet industry.
3) Expanding the market share strategy: - Market leaders can improve their profitability
through increasing their market share. Market leaders are successful at expanding their
market shares, like HLL, Proctor & Gamble, and McDonalds
Market-Challengers Strategies: - The firm that occupies second & third ranks in an
industry can be called runner up or challenging firms for ex. Pepsi, Pepsodent.
The following strategies can be adopted by market challengers.
1) Frontal Attack: - This strategy is used when the challenger masses its competitive
forces right up against those of opponent by attacking its competitors strength rather than
its weakness. For this to succeed, the challenger needs a strength advantage over its
opponent.
2) Flank attack: - This strategy is used when the challenger set its sights on its targets
weakest points
3) Encirclement attack: - It is used only by well financed firms. It involves an attempt to
capture a wide slice of the competitors market through a grand offensive on several
board fronts.
4) Bypass attack: - It avoids any belligerent move directed against the competitors
territory. It involves bypassing competitors & attacking easier markets.
5) Guerilla attack: - It involves making small, intermittent attacks on different territories
of the opponent. A guerilla attack uses both conventional & unconventional means of
attacking the opponent.
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Market Follower strategy:-

The following broad strategies are useful:-
1) Following closely: -The follower appears a challenger. In many aspects, but does not
muster too great a effort so as to block direct conflict. Such patterns are common in
capital intensive, relatively differentiated industries, such as Steel, Fertilizers &
chemicals.
2) Following at a Distance:- This technique is usually a safer, less conflict provoking,
alternative to do this, the follower parallels the leaders general price levels, product
innovations & distribution, but at a distance & without significant threat to challenger
3) Following selectively: - In this strategy, the firm follows the leader quite closely in
some ways, goes its own way in other instances, & sometimes chooses not to participate
at all. The firm might be quite innovative, & get it avoids direct competition in board
fronts.
Market- Nichers strategies:-

Successful market nichers own their success to using one of these strategies to gain a
solid market presence.
The nicher can play a role a specialist in the following ways;
1) Channel specialist: - for ex. A nicher can decide to make a very large size distribution
network.
2) Service specialist: - The Company offers one or more services not available from other
companies. An example would be a business management institute taking admissions on
internet or telephones.
3) Product feature specialist: - The Company specializes in producing a certain type of
product or product features.
4) Product line specialist: - The Company produces only one product line or product.
5) Geographic specialist: - The firm sells only in a certain locality, region or area of the
country.
6) Specific Consumer specialist: - The firm limits its selling to one or few major
customers.
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7) Customer size specialist: - The firm concentrates on selling to small, medium or large-
size customers. Many nichers specialize in serving small customers who are neglected by
major firms.
According to ORG (Operation Research group) survey, the rural market for packaged
consumer products has shown a 184 per cent growth during 1984-89; as against the 96%
growth in its urban counterpart during the same period.
Firms like Hindustan Lever, Lipton Brooke bond, Tata etc. use their own sales vans for
interior transportation, but the cost of operating such van is high
Market entry strategy:-

1) Penetration pricing: - A penetration pricing policy involves setting prices of a product
relatively low compared to those of similar products in the hope that they will secure
wide market acceptance, which will allow the company to raise the price at later date for
example Anchor White & Ajanta toothpastes used penetration pricing to enter the
crowded dental cream market.
2) Economy pricing:-
3) Value pricing:- This approach is used in case when external factors such as economic
recession or increased competition forces a company to provide Value products &
services to retain sales for example Godrej No.1soap placed their offering containing
rose, sandalwood & neem ingredients at a very economical price. Similarly Ajanta
offered vegetarian toothpaste at a low price.
4) Coinage pricing: - Coinage pricing strategy is mostly used in rural markets for FMCG
brands prices are set at coin value. These packs are small in size & are normally meant
for one-time consumption. For example, Coca-cola has effectively used the
communicated price point (Rs.5) of their small bottle to attract new segments. Some of
the brands that HLL sells for rs.5 are Pepsodent, Ponds Dream flower Talc, Ponds Cold
Cream, Rin, Taaza, Fair & Lovely, Clinic plus & Lux
5) Psychological pricing:-
6) Discount & Allowances
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Discounts - A word of caution

Rural consumers very much like buying products at a discounted price, but the risk is that
sometimes a perception is created among consumers that the reduced price is the actual
price of the product & that earlier the company was charging a higher price!
Quantity discount: - Providing more quantity for the same price, for example, offering a
125gm. Toothpaste at the price of the standard 100gm. Pack many companies also offer
the 1+1 scheme (Good Knight Mosquito Coils)
However, in the case of commodities such as flour & salt, the quantity-discount strategy
is often not very successful because most people do not like to buy larger quantities of
such goods even at lower prices. Many customers will tell the retailer to keep the extra
quantity & instead give them the regular quantity after adjusting the price.
Discriminatory pricing:-
1) Customer-segment pricing: - Retailers sell the products at the MRP to people who buy
on credit whereas they will offer the same products at lower prices to people who
purchase on cash.
2) Product from pricing: - Like pan shops selling loose cigarettes, this practice is
common among the rural retailers with many FMCG categories. Mosquito repellent coils
or mat packs are opened & sold piece by piece at a higher unit price compared to the pack
price.
3) Location pricing: - People can buy the product at a lower price in nearby towns as
compared to the price they would be charged by village retailer.
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BRAND MANAGEMENT
Lifebuoy was one of the first soap with rural areas as the key target market. Its jingle
Tandurusti ki raksha karta hai lifebuoy is still fondly remembered by a large number of
rural people. Needless to say it commanded a great brand loyalty. Colgate, Dalda, Tata,
Bajaj etc. have shown that it is perfectly feasible to build a brand in rural areas, provided
the organization adopts right set of brand building tools & in committed to the rural
market in the long term.
The term Brand owes to its origin to the Norwegian word brandr which means to burn
A brand is defined as a name, term, sign, symbol or special design or same combination
of these elements that is intended to identify or differentiate the goods or services of one
seller or a group of sellers. (American Marketing Association, Chicago) (Kotler, 1998)
A branding process, if executed well, creates a brand that is equipped to handle changes
in demographics, thinking, from & functional changes as well as competitors actions,
96% of new brands that are developed in the FMCG sector fails. This only goes to show
that the market place is in unforgiving master. It suggests that branding is not a static
phenomenon; rater a continuous change in product appearance & performance as well as
the total value equation is must for survival of any brand.
Brand loyalty can be defined as the degree of consistency in buying particular brand(S)
as a definition of cognition, emotion, satisfaction, commitment, habit of positive attitude
towards brand(s)
Mass consumption products like tea, soap, detergent & dish washing powder have several
regional brands with loyal customers. They are perceived to give value for money at a
lower price Bhakar wadi a regional tea brand is savory relished in Maharashtra & has
virtually no competition in markets of Gujarat & Maharashtra 555 & Chhokra soaps for
washing clothes are strong regional brands in Punjab & adjoining states. Arun Ice Cream
of Hatsun Foods is another example of successful regional brand in Tamil Nadu
commanding nearly a third of market share.
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In FMCG sector, the next battle for a market share in rural areas would be between local
or regional brand on one side & national brands on the other. The latter would
vehemently fight using all means to retain their market share & service. In the FMCG
sector, if we perform state by state analysis in India, the number two brand, in most of the
cases, is a regional brand.
Regional brands: Success stories.

Anchor Toothpaste: - Anchor toothpaste has the backing of Rs.1000 cr. Business group
dealing with electrical appliance. The 40- year- old Anchor group, realizing it had a
stronger retail network, decided to enter the toothpaste. Business Company identified a
unique selling proposition, which might have never, occurred to an MNC, Vegetarian
toothpaste. Some of the standard ingredients in toothpaste are obtained cheaply from
animal source & Anchor found an alternative in vegetable oil. Its Vegetation theme paid
off with company making inroads in states such as Gujarat & Rajasthan with high
concentration of purely vegetarian population. Anchor was Rs.150 cr. Toothpaste brand
build by Company that was totally in unrelated business of electrical switches due to the
extensive distribution network & understanding of market.
Parakh Foods: - Parakh Foods, which shot up to the top of growth league tables with its
Gemini Oil, is also backed by business group with good turnover. It started with the Dal
& Besan mills in 1964. In the 90s, the business reached saturation point. Sensing little
scope for expansion in existing businesses, they looked at new commodity based
businesses. The company launched Samrat edible oil leveraging the existing brand &
keeping its price low while maintaining the quality. Soon another brand Gemini was
introduced for refined Sunflower Oil at Rs.36 a liter. It was 30% cheaper than the price of
Rs.52 charged by established players. It now commands a significant market share in its
category.
The Cavinkare Strategy of providing the consumer with a free sachet of Shampoo if they
bring in five used empty sachets of Chic Shampoo, made the customer conscious that he
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is buying only the Chic Shampoo; otherwise he will not be able to get the free sachets if
the empty sachet he retunes is of other brand or fake brand. Rural consumer recognizes
the Parles pack of biscuits by its yellow stripes of the baby.
Brand loyalty:-The concept of stickiness

Rural consumer is now faced with a lot of choice & having to evolve evaluating
parameters for making choices, as more brands appear on rural retail shelves (80% of all
packaged FMCG sold in rural market are branded either national or regional source:
ORG), still the number of FMCG brands available in rural markets is less than half of
those available in urban shops. Some brands like Ghari, Parle-G, Lux, fair & lovely &
Colgate were early entrants in rural markets & have gained high acceptance over period
of time, with virtually no competitive brands present in the market, availability was the
prime driver & what urban marketer interpret as brand loyalty is in fact brand stickiness
in rural India, a phenomenon where the villager stays with the brand not out of the
informed choice but because he does not know better.
The phenomenal success of Ghari detergent in the rural Hindi belt is attributed to product
performance matching promise, leading to customer satisfaction. The detergent is able to
clean the while dhotis/pajamas at an affordable price which is what rural consumer
expects from the product. Issues such as life span of clothes & protection of hands from
harsh chemicals in detergents are not important criteria for the rural consumer.
Markets have focused on creating awareness & making their brands available in rural
market but have made little efforts to build relationship with their customers. This is very
important aspect in the rural sector because villagers trust people with whom they have
strong relationship (family, friends, neighbous). Marketer need to convey a feeling of an
extended family with the trade & a sense of caring with consumers to build enduring
relationship in the rural sector. For a brand to establish in rural India, marketers need to
educate customer, develop their interest through interactive communication, trigger their
desire to own new product & build confidence in the brand through live demonstration &
post-purchase engagement with a customer.
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All of these measures help build long term relationship to succeed in the rural market.
Brands must understand preferences of different customer segments rather than a attempt
a mass pan-India marketing approach. Regional tea brands like Lamsa in Maharashtra &
Kala Ghoda in Rajasthan are examples of successful regional brands that have flavored
their tea with spices to cater to local tastes. This customized convinces local people that
these brands care for them & creates a positive thinking towards the brand, the first step
in building a strong relationship with customers. The emotional connect add extra value
added to the products, resulting in regular purchase preferences & creating enduring
brand loyalty.
Branding in Rural India:-

Per cent <20% 21-40% 41-60% 61-80% 81-100%
branded
Necessity Non- Iodised salt, Biscuits Toilet soap, Washing
refine Tea, Washing powder
d oil cakes
Popular Coconut Blues Analgesics, Safety-razor
oil blades, Toothpaste,
Shampoo
Premium Vanaspati, Batteries, Rubs & balms,
bulbs, Skin cream, Toothpowder
Hair oil
Super- Refined Home Toothbrushes, Antiseptic
premium oil insecticides creams, Antiseptic liquids,
Chyavanprash, Digestives,
Mosquito repellents,
Shaving preparations,
Tube lights
Source: - Business World, April-1999
Branded consumption now accounts for 80% total sales in as many as 18 product
categories; brands may be national, regional or local
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Association Brands
Colours Lal Dant Manjan, Lal Sabun (Lifebuoy), Red battery (Everady)
Numbers 302 Pataka bidi, 555 detergent bar, 502 Pataka chai
Visuals Ghari detergent, Rath vanaspati, Chotiwala tel, Bagh Bakri tea, 3 Roses
tea, Katchua Chhap Mosquito Coil
Retailers play a major role in brand promotion in rural. Due to the strong bonding & trust
between consumers & retailer, coupled with low brand awareness, consumers often do
not ask for the product by brand but instead will request the retailer, paanch rupaye wali
chai dena , that is Give me the five-rupee tea. Now it is up to the retailer to push the
brand that he chooses since he is a strong & influential force in rural markets because
consumers trust its recommendations.The first mover brand in rural hence became
generic brands. Detergent powder came to be identified with Surf, vegetables oil with
Dalda & Mosquito coil with Katchua Chaap.Also brands like Clinic plus, Lifebuoy,
which were first movers at the national level in rural India, have became at the national
level in rural India. Hence became the most successful brands despite being priced higher
than competitions. Britannia Tiger biscuits created an identity associated with a smart,
active & sharp child.
Brand Spectrum in Rural
Largest Rural Brands:-
Brand Category Growth (%)
Parle- G Biscuits 8.2%
Lifebuoy Active Toilet soap 6.4%
Lux Toilet Soap 5.6%
Ghari Washing powder 21.5%
Nirma Washing powder -13.1%
Figures are year on year growth for MAT July 2004 by value
Source: - A.C. Nielsen Retail Store Audit, MAT July 2004
Brand Market Share (%) Growth (%)

Alpen Liebe Candy 17 4.8
Tata Salt 11 9.0
Britannia Marie Gold 9 4.5
Britannia Tiger 5 16.9
Source: - A.C. Nielsen Retail Store Audit, MAT July 2004 (figures in volume terms)
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Brand Loyalty vs. Stickiness: - Loyalty level

Category % Loyalty Category % Loyalty
Chyavan Prash 77.3 Biscuits 22.8
Shaving Preparation 67.3 Batteries 17.7
Toothpowder 47.3 Toothpaste 12.6
Tea 25.3 Toilet soaps 3.1
Iodised Salt 24.2
Multiple brand users are those who have bought more than one brand in a category in the
last month.
The Retailer decides The Brand:-

In a small study conducted in 2004 in rural U.P. by MART for HLL. It was found that in
the villages retail outlets, only regional & local brands were displayed on the shelves.
Customer who purchased on credit were offered regional brands on which the retailer in
turn gets a credit facility from the wholesaler when a cash-paying consumer entered the
shop & asked for a HLL brand, the retailer pulled it out from his counter draw! So the
retailer decided which brand is sold to a cash-paying customer & which brand to a
Credit-paying customer. Regional/local brands dominate in rural & their MRP have no
sanctity.
ADVERTISING
Rural communication: - AICDA Model
Awareness Interest Conviction Desire Action
National
Languages
Hindi/English
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Scheduled languages
Assamese, Bengali,
Gujarati, Kannada,
Kashmiri, Konkani,
Malayalam, Manipuri,
Marathi, Nepali, Oriya,
Punjabi, Sanskrit, Sindhi,
Tamil, Telugu, Urdu
Languages with widespread use

47 languages used for primary education
98 used in print media
71 used on radio, 13 used in films
Local vernaculars
Over 114 recognized varieties
216 mother tongues with more than
10,000 speakers were recorded in 1991
Source: - Tej K. Bhatia, Advertising in Rural India.
The Communication Process Model based on Schramm, 1969
Sender Encoding Message Media Decoding Receiver
Noise
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Feedback Response
FMCG category Advertisement:-
Babool advertisement: - Rural people had a problem comprehending the message as it is

two quick, in the north, some respondents thought the advertisement was for a
toothbrush/ shaving cream.
Navaratna advertisement: - Rural people asked, Why should he be dancing when he has
a headache? Most rural respondents in the south could not recognise Govinda. Similarly
in the north the recognition of Rambha has very low.
Dabur Janam Ghunti: - To market baby stripe water, Dabur Janam Ghunti, Dabur India
profiled rural consumers at Haats & Malas. The exercise helped the company debunk the
myth that the rural consumer will opt for tried & tested home recipes when it comes to
baby care products. In addition, It was discovered that while it is the housewife who
decides on product category, the man does the brand selection & purchase. These insights
helped Dabur India to redesign its communication strategy.
Lifestyles: - Shampoo advertisements that depict woman tossing around their own
lustrous hair is a turn off for most rural women, as they tie up & cover their hair, instead
of creating a marketing, the adventure is creating cultural barrier.
Purchase needs: - During the pilot test launch of Vardaan bidi, the marketing team
discovered that many rural people believe that tobacco smoking leads to impotency. The
company decided to redesign its communication strategy, to stress the fact that Vardaan is
a tobacco less bidi & does not cause loss of sexual vigour. While promoting Revital
health capsules, it was found that farmers in rural Punjab seek power & vigour, whereas a
rickshaw puller or a truck driver demands more energy & longer hours of concentration
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so as to increase his earning. Revital customized its one-to-one communication to address

these differing expectations of consumers from the same product.
TOMA: - Top of Mind Awareness
Rational appeal: - economy theme of Babool toothpaste advertisement, Babool Babool,
Paise Wasool
Brand Functional element Aspirational element

Lux Pure & mild Glamour & escape
Lifebuoy Health Heroism
Ponds Dream flower Body care Achievement, career women
Blue Wheel Washing bright Achievement
Minto Fresh: - A television commercial for Minto Fresh, narrates the story of a Baniya,
Khussat Lal whose beautiful young wife, Mainna is unhappy & miserable. Enter a young
man, Challiya, riding a bicycle & chewing Minto Fresh dazzled & impressed by our
glamorous & dashing young hero, Mainna runs away with him. The advertisement ends
with the Line Karna ho Mainna ko impress to khao hamesh Minto Fresh.
Pictorial presentation:- The use of Symbols (the muscle man logo of MRF tyres, the
Plus symbol of Clinic plus shampoo in promoting the brand helps rura; consumers
easily identify the brands at the point of purchase.
Advertising: - Advertising is highly public mode of communication. Its public nature

confers a kind of legitimacy on the product & also suggests a standardized offering.
Advertising can be used to build & enhance a long term image for a company/product.
The recent ITC advertisement Putting India First cleverly weaves the companys rural
initiatives of e-Choupals & large format rural retail stores to position ITC as a fairly
indianised company, concerned about the uplift of rural people & also to trigger quick
sales.
Direct House to house campaign:-

In 1998-99, Hindustan Lever implemented a major direct contact programme called
Project Bharat, which covered 2.2 crore homes. Each home was given a box at a special
price of Rs.15, comprising a low-unit pack of shampoo, talcum powder, toothpaste &
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skin cream, along with educational leaflets & audio-visuals demonstration. The project
helped to eliminate barriers to trial & strengthened the salience of both particular
categories & brand.
Push vs. Pull strategy: - factors in setting the promotion mix

A push strategy calls for using the sales force & trade promotion to push the product
through the channel. A Pull strategy calls for spending lot of money on advertising &
consumer promotion to build a consumer demand. For example, established players like
HLL & Britannia with deep pockets & a national presence rely more heavily on Pull &
small players like Ghari & Anchor with limited promotion & advertising budget, prefer
the push strategy.
Hoardings:-Hoardings on villages entry junction, writing, painting on wall of public

building in villages, compound walls of private people will be more appealing &
readable. The rural inputs like fertilizers & pesticides are advertised like this. The picture
of product & catchy slogan are considered to be the best promoters.
Various congregations like mela-Kumbha mela, Pushkar mela, Mysore Dussera,
Shabarimalai (Kerala). Local deities & Jatra or Fairs along the festival type celebrations
Marketing activities
Push strategy Manufacturer Intermediaries End user
Marketing activities
Pull strategy Manufacturer Intermediaries End user
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General scheme for Rural Advertising Production:-
Global Positioning: - English
Regional Adaptation: - Four regions of India: North, South, East, and West.
(E.g. Hindi for North, Tamil for South, Bengali for East, Marathi for west)
Area-specific adaptation
(e.g. Punjabi for Punjab
Last- Destination, Adaptation:

Rural dialects, Colour & Motif
Source: - Tej K. Bhatia, Advertising in Rural India.
Message Effectiveness:-
Meaning: - Words have differed meaning in

different region & hence may cause
distortion
Language
Simple: - Improved receptivity
Pictorial Improves recall

presentation
Utilitarian: - Influences attitudes & preferences
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Form
Narrative: - Increases refection through
involvement
Message
Trustworthy: - Used for feedback on product

performance
Source Likeable: - Increases acceptance
Expert: - Effectiveness increases in

evaluation for complex products
Associations Creates interest & improves

comprehension
Source: - Sanal Kumar Velayudhan, Rural Marketing
MEDIA MANAGEMENT
Media & Media Reach in Rural Markets:-

Percentage of Rural Adult Population Total Number (Million)
Press 9 32
Radio 28 113
TV 27 108
Cinema 36 125
Total 100 352
Rural Media:-
Conventional Media Non-conventional Media Personalised Media
Television Haat & Male Direct mailer
Radio Folk media (Puppet show, Point of sale
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Magic show (Demonstration, Leaflet)

Press Video van Word of mouth
Cinema Mandi Interpersonal
communication
Outdoor:- Wall paintings, Animator
Hoarding
Rural Adult viewers of TV & cinema & print media readership

Rural adult viewers %
Region TV Cinema Print media
readership
East 23 29 4
North 37 24 7
West 39 23 7
South 26 76 18
All India 31 36 10
Radio- print media

Region wise readership
Region % Rural readership % share of total readership
East 4.0 13.0
North 7.3 20.0
West 6.8 16.0
South 18.3 51.0
All India 9.8 100.0
State wise Kerala has the highest readership of rural people at 53% & Bihar has the
lowest rural reader at 3%
Media Topology- Intrinsic Characteristics

Media Reach Audience Type Accessibility Viewin Audience
form involvement Time/Place g cost Exposure
TV Mass Low Urban Limited in No Transient
rural areas
Cable Mass Low Urban Limited in Yes Transient
rural areas
Radio Mass Highest in Urban Highest in No More
Mass media mass media lasting than
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TV
Print Mass No Largel High in rural Yes Permanant
y areas
Urban
Cinema Mass Higher than Mixed Somewhat Yes Transient
TV limited in
rural areas
Video Personal/ Very high Mixed Highest/but No More
rath Customise (When van not mass lasting than
d arrives)/ media/reache TV/mass
Hands on s where mass media
demonstratio media can
ns not reach
Wall Personal/ High Rural Highest in No Lasting
paintings Customise rural areas
d
Calender Less than No Mixed Limited in Yes Lasting
Art print rural areas
Haats/Or Personal/ Highest Rural Highest/ but No More
al sales Customise (Hands on not mass lasting than
calls d demonstratio media/ convention
n) reaches al media
where mass
media can
not
Source: - Tej K. Bhatia, Advertising in Rural India
Doordarshan: - The Doordarshan television channel has the maximum reach in rural
India. The overall reach (urban rural) is 97% of the entire population of India.
Classification of Indian housewives: - A separate classification has been suggested by
pathfinders for Indian housewives, in which 8 categories have come up. The gregarious
hedonist (east, Bengali speaking, liberal extrovert), contemporary, affluent, sophisticated
(west, spender & open minded), tight-fisted traditionalist, troubled home-body (largely
Page 81
illiterate, low media exposure), anxious rebel (south, workaholic thrifty), contented
conservative (optimist, efficient)
Page 82
The Distribution Systems of FMCG companies from Study of Rural Distribution Channels, MART 2004
Layers 1 2 3 4 5
partners
Super stockist,
C&Channel
FARural Depot
stockist,
+ Sub-stockist,
Distributor, Star
Van operator, Sub-distributors, Retail Wholesaler Retailer
Cavin-Kare C distributor
& FA Distributor, Super Sub-distributors Wholesaler Retailer
Eveready C & FA Van Operator Retail stockist, Wholesaler Retailer
HLL
distributor
C & FA Rural distributor, Urban Star seller, Shakti dealer Wholesaler Retailer
Britannia
distributor
C & FA Rural distributor, Urban Sub-distributors Wholesaler Retailer
Nirma Depot Distributor Wholesaler Retailer

Ghari Distributor Wholesaler Retailer

RURAL MARKETING-DISTRIBUTION
Priya Gold Super stockist Sub-distributors Wholesaler Retailer
Page 83
Channels of Distribution:-
Layer Channel partner Location

Layer 1 Company depot/ C & FA National/ State level
Layer 2 Distributor/ Van operator, Super District level
stockiest/ Rural distributor
Layer 3 Sub-distributor/ Retail stockiest/ Sub- Tehsil HQ, Town & large villages
stockiest/Stall Seller/ Shakti dealer
Layer 4 Wholesale Feeder towns, Large villages, Haats
Layer 5 Retailer Villages, Haats
Channel of distribution for FMCG:-
Company manufacturing plant Company depot
C & FA Distributor Sub-stockist
Retail outlets Consumer
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Distribution model of FMCG companies:-
Company
C & FA
Distributor Distribution
(Rural) (Urban)
Wholesaler
Sub-distributor Wholesaler
Retailer
Retailer Retailer Retailer Retailer
(Urban)
Rural Local (Satellite Market (Urban)
Marketkt)
Page 85
Distribution model 2
Wholesaler Retailer
Company C & FA Distributor

Depot
Retailer
Local
Nirma Distribution System:-
Nirma
Ahmedabad
Hyderabad, Kolkata, Kanpur

Depot
Direct
Distributor
Covers
At the district level 300-400 Outlets
Directly
Sub-distributor/
Big wholesalers
At the Tehsil level
Wholesaler Wholesaler Retailer

Retailer
Per capita Sales= Annual Sales/Market Population
Page 86
M M M M
C R W W
C R J
C R
Fast moving consumer goods marketing channel
Manufacturer
Wholesaler Wholesaler
Jobber
Retailer
Retaile Retailer Consumer
1) r Direct or 2) one level Channel
3) Two Level channel 4) Three level channel
Zero level channels
Amul distribution pattern organisation
Federation
Page 87
(State level)
Union
(District level)
Inputs Outputs
DCS
(Village level)
Farmers
Distribution: - Consumables are purchased in the village shops, shandies or in bigger
villages, consumer durables are purchased only in mandi centers, large town or nearby
cities. The distribution system of Proctor & Gamble covers every village or town, which
has a population of at least 5,000 persons.
Distribution strategy- Hindustan Lever:-

It is only some enlightened companies like Hindustan Lever Limited (HLL), which has
recognised the great potential offered by the rural market & has been constantly trying to
extend their distribution system beyond the villages they are already covering. In the
early eighties, HLL had initiates a scheme called Operation Harvest to extend their
distribution system to villages with a population of 2,000 & above Persons which offered
sales of at least 2,000 per visit. In the nineties, HLL had Operation Bharat to cover the
villages with a population of about 1,000 persons. In the late nineties or early Twentieth
century, they again has programme called Project Shakti to cover villages with less than
1,000 populations. Thus HLLs presence is felt in very small villages also.
Excellent distribution system:-
Carrying & Forwarding Agents (C & FAs)
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State wise one or two
Redistribution Stockists
Covers specific area by vans
Indirect Coverage (IDC)
Villages with Business Rs.15, 000/- Others villages

Visit every week once a month
Rural transport
Page 89
Distribution systems of Britannia: -

Production Centre
(Company/owned & contract manufacturing)
Carrying & forwarding Agents

(C & FA)
Authorised wholesalers
(Distributors, redistribution stockiest)
Wholesalers Retailers
Smaller retailer
Customer
Page 90
PACKAGING
Pack size & convenience: - Sachet Revolution-
Chik Shampoo:- The success of the Velvet shampoo sachet was the harbinger of a
revolution in the shampoo industry as conventional beliefs about it being an upper-class
product were shattered. Cavinkares Chik shampoo was launched in southern India in
1983 to grab the opportunity to provide the consumer good-quality shampoo with
appealing perfume at a price that will delight the consumer.
Cavinkares team traveled extensively in rural pockets & caught hold of schoolboys for
shampoo demonstration in order to make people comfortable about the idea. At the same
time, consumer schemes such as providing free sachets in exchange for four empty ones
were also used. These experiments gave the brand its identity of consequent popularity. In
1990, the brand introduced the concept of a variety of floral fragrances (thus offering a
choice to consumers) & tripled its sales within a month.
Encouraging by the response, Chik shampoo turned national with rural focus through
innovative trade scheme & consumer offerings. By responding to consumers needs like
offering attractive wrapping, by 1999 Chik had became the second largest brand in its
category. Latter the company realized that reducing its price from current Rs.2 to 50paisa,
it would be able to convert many non-shampoo users to its use & dramatic results were
obtained as the market share increased from 5.61% to 23%. The sale of 50paisa sachets in
the rural market is almost five times that of the urban market an Rs.100 crore brand with
65% of sales from rural markets, Chik shampoo today is number one in many states
Source: - Compiled from the article in the praxis issue on managing rural markets; July
2003 conducted by Mr. C. K. Ranganathan, CMD, Cavinkare.
This strategy of selling in smaller packs to enroll lower SECs was later followed by HLL,
Godrej, Dabur & a large number of players at the price point of 50paisa, Rs.1 & Rs.2 in
the FMCG market. Riding on the success of shampoo, sachets packaging was replicated
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in many other product categories (Tiger biscuits, Close up toothpaste, Parachute hair oil
etc.)
In the early 19990s, Rasna Industries introduced a soft drink concentrate sachet priced ar
Rs.5, which makes six glasses (compared to the regular pack, costing Rs.27.50, which
makes 32 glasses). This addressed the problem of cooling soft drinks in addition to the
affordability factor. Several years late, Coca-cola introduced its Rs.1 single used Sunfill
pack for rural markets. Companies introduced soaps, cosmetics, cold drinks, & toothpaste
in small packs Beauty soaps (Lux, Breeze), Ponds Cold cream, fair & lovely cream,
Chota Pepsi & Close up toothpaste were made available at Rs.5 in small packs. Tiger
biscuits were introduced in transparent oropacts especially designed for small outlets like
Paanwalla shops that do not normally stocks biscuits.
Convenience is another important factor in the decision to use a product. Colgate

introduced its toothpowder in a small sachets & provided a cap for the packet as rural
households often do not have a proper place to store things in the bathroom =. Other
products also designed for convenience of use include Close-up toothpaste & fair &
lovely cream with cap. Another recent innovation in the packaging has been undertaken
by Marico, which introduced parachute coconut oil in Rs.1 plastic bottle that are easy to
use at any time.
If rural India today accounts for about half of detergent sales, this is because the industry
has developed low-cost, value-for-money, branded products like Wheel & Nirma. Sachets
today constitute 70% of HLLs sales. According to an ORG-MARG study low-unit-packs
(LUP) have grown nearly 10% between 1995 & a1999. LUPs are driving sales in most
categories like shampoo, beauty soaps, talcum powder, toothpaste & skin cream except
categories like biscuits, sanitary napkins & milk powder.
Packaging Aesthetics: - Lifebuoy is identified as the red soap. Tiger biscuit has an
attractive red pack with an image of Tiger. Distinct altering of local languages on the
pack & images or symbols that convey the products benefit influence consumer
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perception about the brand. The picture of lightening used on Rin detergent pack is
distinct & communicates the brand benefit of whiteness easily & effectively to the
illiterate consumer. In the case of ITC, which sales its Gold flake brand with a yellow
cover in the south, where this colour is associated with prosperity & purity. In the north,
the package colour is golden as in this region yellow is often associated with jaundice &
ill-health.
Year-wise launch of small unit packs:-

Sr. no. Product category 1998 1999 2000 2001
1. Washing Powder/liquid 27 21 19 25
2. Coconut oil 14 21 19 25
3. Hair oil 11 6 6 15
4. Shampoo 17 38 47 51
5. Toothpaste 1 5 9 05
6. Toothpowder 9 6 11 03
7. Talcum powder 8 21 17 25
8. Skin cream 7 5 4 1
9. Packaged tea 51 63 63 15
10. Coffee 4 5 2 6
11. Ketchup/sauce 0 3 2 1
12. Mosquito repellent 2 2 2 3
13. Biscuits 11 55 35 23
Source: - Small Talk, The Economic Times, Brand equity, March 20, 2002 pg.3
Most popular pack sizes:- Rural

Product Pack sizes available Popular size (contribution)
Biscuit 5gm-7000gm 100gm (43%)
Razor blades 1-60 nos. Pack of 5 (63%)
Shampoo 3ml-1000ml 7ml (41%)
Washing powder 20gm-5000gm 500gm (39%)
Source: - A. C. Nielsen Retail Store Audit, MAT July 2004
Contribution of small packs (% of sale) to volume: rural & urban:-

Sr. Product 1998 1999 2000 2001
Rural Urban Rural Urban Rural Urban Rural Urban
no category
.
1. Washing 12.0 7.4 14.2 8.2 17.2 8.7 19.4 9.6
powder
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2. Coconut oil 6.4 4.0 9.8 6.0 10.8 6.9 13.1 7.9
3. Hair oil 16.4 9.8 17.8 10.7 18.3 11.0 18.3 11.5
4. Shampoo 85.0 46.6 86.5 52.6 89.3 56.1 90.0 59.4
5. Toothpaste .08 0.9 1.4 1.4 2.0 1.8 3.4 2.7
6. Toothpowder 49.8 35.7 54.8 38.7 56.7 41.0 56.8 42.9
7. Talcum 22.3 13.0 28.5 16.2 34.3 18.2 31.8 18.1
powder
8. Fairness 1.8 3.2 1.2 3.5 1.0 3.5 0.5 2.5
cream
9. Packaged tea 65.8 38.0 66.4 41.5 66.8 40.4 64.7 40.7
10 Coffee 19.6 8.3 28.9 9.4 33.0 12.1 37.8 13.3
.
11. Mosquito 2.8 1.3 4.6 3.7 4.9 3.0 4.7 4.1
repellent
12 Ketchup/sauc 0.0 0.5 0.1 0.7 1.1 1.4 2.5 1.3
. e
13 Biscuits 1.5 1.4 1.7 2.0 3.1 2.9 5.2 4.4
.
Source: - Small Talk, The Economic Times, Brand equity, March 20, 2002, pg.3
Low priced packaging: - A good example is that of Taj Mahal tea, a brand of the erstwhile
Brooke Bond. Taj Mahal is a premium branded product, which is also available in sachets
in rural areas is an inferior blend, qualified by the words Janata Blend. By evolving a
blend & terming it as Janata Blend. The price is kept within the reach of rural
consumers. Another recent example is the blend sold by Hindustan Lever, Which we
discussed earlier. To keep the price of tea within the reach of rural buyers, they marketed
a brand of tea which contained 70% tea, 20% Chicory & 10% Tapioca flour. When tea
prices increase, blending the tea with low cost fillers like Chicory & tapioca makes sense.
If one is interested in rural market similar is the case of Cigarettes where blends like Blue
Bird, Honey Dew, Taj Chap, Passing Show, etc. are thriving. The basic objective of
keeping the price low is to entice rural consumers to try. This may not be possible in all
types of products. But wherever this can be resorted to, the market is bound to expand.
FAKES MARKET
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Some names of original & Imitation of products:-

Sr no. Original Products Imitation Products
1. Ponds pollons
2. Rin Run
3. 501 Bar 509 Bar
4. Cadbury Eclairs Choudhary Eclaires
5. Brook Bond Paisa(Packs of Benson Brand Paisa
Tea)
6. Nirma Nilima, Narima
7. Lifebuoy Lifejoy, Liteboy
8. Colgate(Toothpaste) college
9. Fair & lovely (fairness Friends & Lovely
cream)
Fake brands:- An ORG-MARG retail audit found that for every 100 strips of genuine
Vicks Action 500, these were 54 counterfeit strips sold in the market for example, Bonds
(for Ponds talc), Fair & lonely (for Fair & lovely), Likeboy (for Lifebuoy), Clinic
shampoo with clamic & Tiger biscuits with Fighter. Rural markets suffer from the
problems of low penetration & poor availability of branded products. Hence, although
there exists a huge demand for branded products, there are no distribution channels to
make the product reach the customer. This has led to the growth of spurious brands to fill
this gap in the demand.
THE FAKES MARKET
Look-alikes:- Look-alikes products where appearances (packaging material closely

resembles) is similar to that of a popular brands in same product category for example,
Shagun for Lifebuoy (150gm) & Lalita Amla for Dabur Amla.
Spell-alike: - Spell-alike are fakes of original brands have names that are subtly &
cleverly misspell for example, Paracute for Parachute, Fare & Lonely for Fair & Lovely
& Pomes for Ponds.
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Duplicate: - Duplicates are exact replicas of original brands- colour, design & name on
the package wrapper of the original brands i.e.- ingredients, brand name, manufacturer
name.
Features Duplicate Spell-alike Look-alikes

Brand name Original Misspelt Different
Pack appearances Replica Identical Similar
Manufacturers address Original Incomplete Own name
Price M.R.P. 40 % low 10-15% low
Margins 200-300% 100-150% 60-70%
Quality Very poor Poor Reasonable
Intention of retailer To cheat To mislead To freeload
Consumer Unaware Unaware Want cheaper product
Identify None Only literate Majority
Offer None Discounts Schemes
Strategy for counter fakes: - Action against fakes:-
Dabur: - Dabur replaced its plastic blow-moulded container with a premium four-colour
shrink-sleeve packaging, which has a graining texture & water bubbles. The packaging is
difficult to replicate. This resulted in a sales growth of 12% of original products. Others
have assigned the task of checking counterfeits to their sales force.
P & G initiates raid on brand pirates: - A research study by A. C. Nielsen introduced that
sales of Vicks look-alike products equaled the sales of the genuine brands. P & G initiated
action against the manufacturers of look-alike Vicks Vaporub & Lozenges. The company
obtained an injunction from the court & with the assistance of court representatives &
advocates. It conducted raids on the premise of the fake manufacturer & sized products
valued at Rs.3.5 million. These included a look-alikes veporising rub being marketed
Page 96
under the brand name Vikas cough drops under the name Venus & a Menthol drop under
the name Super plus 5
Coca-cola:- Coca-cola has put into place 48 consumer response coordination, who works
with their team to redress the consumers complaints about overcharging & spurious
bottling. In addition, they have a large network of route salesman, who have a one-to-one
relationship with the retailers on their beat & hence are able to keep their ears to the
ground.
CHALLENGES & OPPORTUNITIES
Opportunities in rural markets:-
There is an opportunity to make a lot of money in rural India. But, there are obstacles too.
The biggest obstacles are that the rural consumer is still evolving. Thus we can conclude
there are both challenge & opportunities in the rural market. But a responsive marketer,
who makes a serious attempt to understand the rural market with regard to his product
category, is more likely to succeed than one who has a piecemeal approach towards it.
Rural markets remain untapped because of 3 Ds- Distance, Diversity & Dispersion,
according to D. K. Bose, vice president, O & M Rural. Reaching your production remote
location spread over 6, 00,000 villages & that too with poor infrastructure-roads,
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telecommunication, etc. & lower levels of literacy are a few hinges that come in the way
of markets to reach the rural market, says MART Managing Director, Pradeep Kashyap.
HLL gets 50% of its sales turnover of Rs.11, 700 cr. from rural India. FMCG have a
market worth Rs.64800 cr. in rural India. Carbonated soft drinks worth Rs.1, 800 cr. are
selling in rural India. As per FICCI estimates 1/3 of premium luxury goods were sold in
rural markets in 2002. Sales of labeled goods have already overtaken those of non-
branded products in villages.
The rural consumer is very religious: - A market can integrate the religious beliefs
prevalent in an area into the marketing mix. The promotional material built around
religious themes is not only going to last longer, but will be kept with care by the
villagers. Keeping this in mind, Dabur developed religious calendars & gave a Hanuman
Chalisa with their products. These gifts were kept by the rural consumers at important
places of home, with care & were used for a long time, such an association with a brand
is of a long term nature & adds to the image of a brand, both in quantitative as well as
qualitative terms
Products can be sold in the rural market provided the packaging & pricing are modified
as per the needs of rural market. The success of Britannias Tiger biscuits, Cavinkares
Chik shampoo & small cake for Rs.5 only are evidences of the phenomenon. The five
rupee Coke in 200 ml bottles are conceived on basis of the insight of the shopping
behaviour of the rural consumer. Mr Kartik Raina of Dalmia Consumer Care, Which has
successfully experienced with a tobacco free beedi called Vardan articulates this as,
The rural market is not for all but for those with the guts, the skin of an elephant & the
mind of an evangelist.
PROBLEMS OF RURAL MARKETING
As stated by A. S. Ganguly (Chairman, Hindustan Lever), directs delivery of goods even

the top 1 percent of the villagers costs twice as much as servicing urban markets
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1) Transportation Problems: - Transportation infrastructure is quite poor in rural India.

Marketing activities require transportation facilities. 80% of the villages in the country
are not connected by roads.
2) Warehousing problems: - In the rural areas, there are no facilities for public
warehousing as well as private warehousing
3) Packaging problems: - Packaging is the first important step of product processing. If

the packaging cost is high, it will increase the total cost of products. It is suggested that
the marketer should use cheaper materials in packaging for the rural market.
4) Media problems: - Media have lot of problems in rural areas. TV is good medium to
communicate at message to the rural people but due to non-availability of power, as well
as TV sets, Two third of rural population can not get the benefits of various media.
5) Seasonal marketing: - The main problem of rural marketing is seasonal demand in

rural areas, because 75% of rural income is also seasonal. The demand for the consumer
goods will be high during the peak-crop harvesting period, because this is the time at
which the rural people have substantial high cash inflows. Rural marketing depends upon
the demand of rural people & demand depends upon income & consumer behaviour.
6) Low per capita income: - Per capita incomes are lower in rural areas compared to those
in urban areas again the distribution of rural income is highly skewed, since the
landholding pattern, which is the basic asset, it is skewed. Thus the rural population
presents a highly heterogeneous spread in villages.
7) Low level of literacy: - The literacy rate is low in rural areas compared to urban areas.
This again led to the problem of communication for promotion purposes. Print medium
becomes ineffective & to the extent irrelevant in the rural areas since its reach is poor &
so is the level of literacy.
Page 99
As a nationwide study by Reserve Bank of India (RBI) on retail traders revealed that the
retailers in rural areas & small town maintain a higher margin than the retailer in urban
places. As per study retailers margin in rural areas is 8.7% as against 5.2% in urban
areas. As per 1991 census, Rural market comprise over 575 thousand villages in the
country, whose population range from less than 100 to 5,000 or more. About 78% of
these villages have less than 1,000 populations about 15% have 1,000 to 2,000
populations. Only 1.1% has more than 5,000population.
Problems in Rural marketer:-
Another mass media is cinema. It has also been observed that whatever
available, cinema viewing habit in rural areas is fairly satisfactory. Again
statistics indicate that rural areas account for hardly about 3,000 to 3,500
mobile theatres which is far less than the number of villages. Under such
circumstance, a company is forced to use its own promotion vans. Companies
like Hindustan Lever Limited, who use such vans, have found it to be very
expensive in as much as the per viewer cost is about 10 to 12 times higher in
rural areas as compared to per viewer cost in urban areas, the wear & tear on
such promotion vans & their costly equipment is also high. Here again, a few
companies like Video-on-Wheels, Sampark Marketing, & Advertising solution
& & Video Express specialize in rural van promotion & this can be taken
advantage by marketer.
Many languages & dialects: - Message has got to be delivered in the local
language & dialects. Even though the member of recognized languages is only
16, the number of dialects is estimated 850. Multi-dialect dubbing in AV
presentation is a viable solution but again, cost is factor.
Low per capita income:- Even though about 30% of gross income product is
generated in rural areas, it is shared by 72% of population, hence per capita
income are low compared to urban areas.
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Product positioning: - consumable product like tea. Very large tea companies
like the Brook Bond Lipton have tea packets price from 25/50 paisa onwards
so that all segments of population are taken care of. The very product
positioning limits the market only to such segment of farmers. While
positioning is possible in case of durables, positioning of consumables do pose
problems.
Vastness & uneven spread: - The number of villages in India is more than
5lakh again the villagers are not uniform in size. Nearly 67% of the villages
have only a population of less than 500 persons, which account for 26% of
rural population. About half of the rural population lives in villages with
population size ranging from 1,000 to 5,000 persons, such villages being
considered as medium sized only 18% of the population live in villages with
population of 5,000 persons & above. Hence one can only think of tackling
about 2lakh medium & large villages, which can be considered as having
adequate potential. This type of distribution of population warrants
appropriate distribution & promotion strategies to decide the extent of
coverage of rural market.
Marketing of consumables:- Probably, there is no village in the country where
one can not find a toilet soap like Hamam or Lifebuoy or a detergent cake like
Rin or cigarettes like Scissors, Bluebird, Charminar or small yea sachets from
Hindustan Lever.
SOCIAL MARKETING
Kotler defines Social Marketing as follows: Social Marketing is the design,

implementation & control of programmes seeking to increase the acceptability of social
idea or cause in a target group(s). It utilizes concepts of market segmentation, consumer
Page 101
research, concept development, communication, facilitation, incentives & exchange

theory to maximize target group response. Colgate-Palmolives rural hygiene
programme is rural areas full in the category of social marketing programmes.
Another example is the National Egg Co-ordination Committee (NECC) advertisement

about the nutritional value of eggs in which no specific company or brand is promoted.
This is aimed at a change in consumption habits of people, resulting in adequate nutrition.
Such programmes not only earn credibility for the organization & promote goodwill
besides generating demand for product.The sanitary ware manufacturer can educate the
rural consumers about the importance of environmental hygiene toilet soap manufacturer
can advice about bodily hygiene. Thus it is possible for every FMCG company to choose
a relevant theme for social advertising & marketing. It should be mentioned here that the
federation of Indian Chamber of Commerce & Indian Industries (FICCI), New Delhi has
instituted annual awards for companies engaged in excellent rural development work.
This is an added incentive4s for the companies to take up social marketing.
a) Frame a public affairs policy
b) Choose a theme or a cause on a long term basis
c) Choose an area to operate, which will enthuse people
d) Take up the social communication programme on the theme chosen.
e) The company decides the social product, price, distribution & promotion
Social Marketing: Corporate Social Responsibility in Rural Market:-
You must have mindshare before you can have market share Christopher M. Knight
Social marketing has been defined as design, implementation & control of programme,
seeking to increase the acceptability of social ideas or cause in a target group(s).
It utilizes the concept of market segmentation, consumer research, concept development,

communication, facilitation, incentives & exchange theory to maximize target group
responses. (Kotler, 1985)
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Social Responsibility initiatives place the brand names in the heart & minds of
relationship seeking rural consumers. This is a bond which other will find difficult to beat
in the marketing warfare For the community to actually experience technology & its
benefit it was figured that a CSR programme would be most effective. Said Divakar
Shukla,Consultant Ogilvy PR.
ITCs CSR initiative in rural areas:-

ITC has taken a good number of social initiatives in rural areas around its plants, which
are helping both the population of adjoining areas & the organization itself as a by-
product. These developmental efforts are providing meaningful employment
opportunities in the village itself. They are also increasing overall income & productivity
of people influenced by them
1) Sunehra kal (Better tomorrow)

ITC has started comprehensive natural resource management initiative called Sunehra
kal in the vicinity of couples, Sunehra kal is social forestry programme , launched by
ITC in 224 villages in 14 man dais around its Bhadrachalam plant in Andhra Pradesh. It
had provided earning opportunity to 6,405 households by the march 2005 after 4 years of
its launch in 2001. This is a part of Triple Bottom Line concept of ITC covering
economic, social, & ecological goal of the organization. This programme is targeted at
economically backward communities; living below the poverty line involves a
forestation, soil & water conservation, community development, health & sanitation,
education & watershed management. It provides attractive land use alternative to both
traditional farmers & wasteland owners.
ITC had aimed to cover 5,000 hectares in 14 mandals with the plantation opportunity by
the year 2005-06. Farmers of the villages can even grow these trees in the background of
their homes. ITC is supplying planting stock & provides extension of services & market
for the produce. The Programme is implementing through three NGOs which identify the
beneficiaries organize them into forest user groups (Sanghas) & create a village
development fund
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2) Livestock Development Programme: - ITCs Livestock development programme, in

collaboration with an NGO has created 32 battle development centers covering 635
villages in Bihar, Uttar Pradesh, & Madhya Pradesh by 2005 & had a plan to add 600
new villages every year to its ambit. The aim of the programme is to create the high
yielding progenies through genetic improvements. It has set up artificial insemination
center for cattle in the villages. These will provide the farmers with the livestock that can
give ten to eleven liters of milk a day & that will certainly enhance the rural incomes
because most of farmers have at least one milch cattle.
3) Other initiatives :- As a part of rural community development programme 40,000

women at risk & children under five have been covered under the mother & child health
programme Rupee 1 from every classmate Notebook sold by ITC goes towards
supporting rural development initiative including primary education in village.
ITC has been conferred with Golden Peacock Award for corporate social responsibility
in emerging economies for 2005. The award has been presented to the company for two
of its initiatives that are impact fully transforming lives & landscapes in the rural India:
ITC e-Choupal & social farm forestry
HLLs Vindhya Valley Project: - In the year 2000 HLL helped state owned khadi board
through an advisory relationship with the Government of Madhya Pradesh. It helped the
board to brand a local produce from villages & tribal areas such as natural honey
collected from forests in the state under brand name Vindhya Valley. The products were
made by groups under DWCRA (Development of Women & Children in Rural Areas) &
distributed through their own outlets
HLLs Swasthya Chetna Campaign: - HLL is positioning its largest selling soap brand
Lifebuoy in the health & hygiene platform. In 2002, HLL launched Lifebuoy. Swasthya
Chetna Campaign to build awareness about good health & hygiene & how simple habits
like washing of hands regularly with soap could prevent transmission of diseases.
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HLL is also sponsoring World Health Organisation (WHO) recommended ORS save the
children to fight diarrhea.
Colgate Project Jagruti: - Colgate executes this rural oral hygiene drive along with the
IDA (Indian Dental Association) in 1998, 60lakh people in 20000 villages were contacted
under this project of which 15000 villages had no experience to the availability of
toothpaste & toothpowder let alone toothbrushes. Though the aim of this drive is to
promote the brand in rural areas, the overall strategy is also spreading the vital
information on oral hygiene among the lesser aware rural folks.
CRM- Indian Rural Market- Context

Customer care is practiced by some of leading FMCG in India. Some examples are given
as: - Recently Rockitt Colman Company for the first time in India has introduced. Tall
free telephone number are made available to serve its customer better Lakme Lever
employs Computer touch Screen to advice customer regarding use of cosmetics on the
basis of the skin colour satisfaction of the customer. Beauty consultants are also there at
the point of purchase to help hesitant customers. Ponds Institute has a customer response
center to answer to reach & every letter & phone call received answered with empathy &
responsibility.
Recently HLL-SURF received open customer feedback on product defects &

suggestions. New products Surf Excel was launched on the basis of suggestions given by
customers.
ANNEXURES
TIMES OF INDIA NEWS REPORT
Poorer states drive rural FMCG sales
Namrata Singh, TNN | Nov 9, 2011
Page 105
MUMBAI: That rural markets are driving consumption of FMCG products is well
known, but the fact that comparatively lesser developed eastern states such as Bihar,
Orissa, Chhattisgarh and Assam are leading rural sales is a trend that is being closely
tracked.
While villages of Punjab, Maharashtra and Tamil Nadu may have upgraded faster to
consume more premium FMCG products, it is these eastern states-which have a
significantly higher percentage of rural population compared to the country's national
average-that are driving rural FMCG sales. In these eastern states, the contribution of
rural FMCG sales to the total is more than 50%, against 40% in a richer state like Punjab,
says an industry report.
Richer states like Punjab, Tamil Nadu and Kerala spend three times more on FMCG
goods compared to poorer states like Bihar and Orissa. But, according to a research report
by HDFC Securities, the disparity in FMCG spending is lower than income disparity
between the richer and poorer states. "Our estimates show an income disparity of 3.4x
between the richer and poorer states. So, the lower differential between spends on FMCG
products shows that catch-up between poorer states and richer states in consumption will
be much more faster," the report states. This essentially means that poorer states are now
expected to catch up faster with the richer ones in terms of FMCG consumption.
"The disparity between the rich and poor rural markets is likely to get bridged in less than
a decade. We will formulate marketing strategies accordingly," says M P Ramachandran,
CMD, Jyothy Laboratories, which owns brands like Ujala and Maxo.
A strong rural franchise has become a source of competitive advantage in the poorer
states. "We believe that companies with a significant rural presence are likely to do well
in these states. Compared to this, the percentage of rural population is much lower in
states such as Tamil Nadu and Maharashtra," the report states.
"There are two kinds of rural markets-prosperous and the not-so prosperous where there
is a critical mass. A prosperous rural market is one where there is a higher proportion of
Page 106
cash crops, floriculture, etc. Consumption in such rural markets is no different from urban
markets. There are other rural markets which may not be very prosperous but have a large
population. These markets are difficult to reach. So having a distribution reach in these
markets becomes a source of competitive advantage," says Saugata Gupta, CEO
(consumer products business), Marico.
Stratification
Given the significance of poorer rural markets, FMCG companies are following a
stratification strategy in product portfolios to cater to the different needs of rich and poor
rural markets. "In recent times, we are witnessing a clear segmentation in the structure of
consumption growth in rural markets linked to demographic/geographic advantages and
differential investments that are going into rural economy across the country," says
Hemant Bakshi, executive director (sales & customer development), Hindustan Unilever
(HUL), which draws about 40% of its turnover of Rs 20,000 crore from rural markets.
Bakshi said the rural growth story continues to be strong in India, while adding: "Starting
from low consumption levels and with increasing incomes, growing access to urban
centres and education is together leading to significant growth."
HUL follows a strategy of straddling the pyramid, wherein every category has
stratification based on pricing. This stratification is now visible not only in products, but
geographies, demographics and consumer segments as well. Today, most FMCG
companies, which have larger portfolio of products, have put in place a segmentation
strategy based on pricing.
Earlier, fewer FMCG companies were expanding their rural market penetration given the
challenges involved in doing so. Today, government-sponsored schemes like NREGA,
higher support prices have boosted rural sales, prompting more companies to undertake
the rural journey for their products. While premium products are being targeted at rural
markets where consumers have a greater propensity to spend, popular/mass products are
being shipped to the hinterland where the population is large but the spending power is
Page 107
less.
Quoting Nielsen data, the HDFC Securities report shows that in Bihar the rural sales
percentage is as high as over 60%. In Assam, Chhattisgarh and Orissa, it is about 50%
and above. However, in terms of FMCG spend variation between states, richer states like
Punjab (almost 100%), Kerala (over 90%) and Maharashtra (over 80%), Karnataka (70%)
are higher compared to Bihar (about 30%).
The FMCG sector has been growing at 15% CAGR (compounded annual growth rate)
since fiscal year 2005. Compared to this, growth in the earlier phase (fiscal year 2002-05)
was a tepid 6%.
Marketing outlook for Indian FMCGs in 2012

By Tarun Arora
Friday,Dec 30, 2011
Tarun Arora, EVP, Marketing, Godrej Consumer Products Ltd (GCPL), lists
the key FMCG trends of 2012:
Rural growth - Most FMCG categories are growing faster in rural as
compared to urban India. This growing importance of rural India will also
mean that regional players and categories with a strong regional franchise
will influence marketing plans. As these categories expand, they will
influence the way adjacent categories and emerging alternatives will seek
to market themselves.
Page 108
Innovation Imperative Innovation is imperative in the FMCG category
today. Differentiation is the key. Product life cycles are getting shortened
given the highly competitive scenario. There is therefore a very strong
thrust on innovation in the FMCG space across various aspects ranging
from brand proposition, packaging, communication, consumer insighting
to pricing.
We are constantly re-engineering our offerings on the innovation plank
with the objective of serving the evolving needs of the consumer. Some of
the examples in the innovation space include the launch of GoodKnight
Advanced Activ+ and GoodKnight Advanced Low Smoke Coil.
Shopper Marketing With the growth in modern retail, the store is
emerging as the most potent medium in the marketing of brands. The
Indian consumer is clearly enjoying the modern trade shopping
experience and is increasingly shopping there, as is evident from the
increased spending at modern stores. Shopper marketing has, therefore,
become an important tool for marketers driving brand choice inside the
stores.
Connecting and engaging with the Indian Digital consumer - With 50+
million active social media users, Indians spend more time on social media
than on any other activity on the Internet, according to Nielsen.
Increasingly marketers are focusing on this medium, however what will be
critical is how brands can effectively break away from the pack in order to
differentiate and improve social media engagement levels.
Page 109
Some of our brand campaigns on social media including the HIT Kill
Malaria campaign have received an overwhelming response.
We continue to be upbeat about consumer demand in 2012. As India is
one of the fastest growing economies, we will witness significant play on
innovation, leading to intensity of competition. We expect growth to be
driven on the back of new product launches and renovations of existing
products. We will invest significantly behind these launches and support
our innovations.
Page 110
BIBLIOGRAPHY
Author Books Edition & Publications

Year of
publishing
Dr. S. L. Gupta Rural Marketing- First Edition Wisdom Publications
Text & Cases 2004
R. V. Badi Rural Marketing First Edition Himalaya Publishing

N. V. Badi 2004 House
T. P. Gopalaswamy Rural Marketing- Second Edition Vikas Publishing

Environment, 2005 House Pvt. Ltd.
Problems &
Strategies
Pradeep Kashyap The Rural Marketing First Edition Biztantra An Imprint
Siddhartha Raut Text & Practice 2006 of Dreamtech Press
Sanal Kumar Rural Marketing Second Edition Response Books
Velayudhan Targeting the Non- 2007 Sage Publications
urban Consumer India Pvt. Ltd.
Tej K. Bhatia Advertising & Second Edition Macmillan India Ltd
Marketing in Rural 2007
India
Balram Dogra Rural Marketing- Edition 2008 TATA Mc Graw- Hill
Karminder Ghuman Concepts & Practices Publishing Companies
Ltd.
Page 111

Rural Marketing Strategies for FMCG Success

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Rural Marketing of FMCG Products

I would like to express my sincere gratitude to my project guide Prof. Richa

My heartfelt thanks to the entire faculty for providing me with infrastructure

I would like to thank to those whose contribution certainly adds value to my

2 Rural Marketing of FMCG (Theory)

3 Conclusions & Recommendations

4 Results and Findings

5 Referenced & Sources

Philip Kotler defines Marketing as a social & managerial process by which

American Marketing Association (AMA) defines Marketing is the process of

NABARD- Definition- All locations irrespective of villages or town, up to a population

As per national commission on agriculture, Rural marketing is a process which

Definition of Corporate Rural Marketing:-

RATIONALE OF THE STUDY

1. The major source of gaining information is Internet.

Phases of rural marketing:-

Nature & characteristics of the rural market:-

Heterogeneous market:-The rural market is not a homogeneous one. As many as

Infrastructural facilities: - The infrastructural facilities like roads, warehouses,

Rural India: - A fertile ground for marketing.

Size of rural market

Source: - Francis Kanoi 2002

Location & concentration of rural population- Geographic factor:-

Rural market structure- Demographic Environment

House Type 1981 1991 2001

Socio-Economic Rural Characteristics, Behaviour, Aspirations & Lifestyle

to be well known in social & political circles, own durables like

Distribution of Indian population by age (All India Rural Urban) in millions:-

Hardly any shops in 2.30lakh villages

Indian villages according to population size

Indian states (Number of villages)

1. Population in million 1027 846 683

Social Economic Classification (SEC) Rural:-

Population below the poverty line (Rural)

Sectoral Allocations during the five year plans (Rs. Billion)

Components of Non-food items Source NSSO 2001

Respondents Sampling- SEC categories

SEC Rural % of rural SEC Urban % of urban

Rural vs. Urban shops

Consumer expenditure in rural areas:-

Rural Income Pattern- Economic factor:-

Demographic Factors- Occupation Pattern:-

FAST MOVING CONSUMER GOODS

Characteristics/ Features of FMCG:-

The phenomena the pricing war is very common in FMCG sector.

Penetration of different FMCG product categories in rural market:-

Fast Moving Consumer Goods (FMCG)

The major players in the FMCG category in rural market

Rural FMCG Market will boom

Toilet soap 7,500 13.40 6,021 11,291

Most popular consumables- Rural ranking, urban ranking

FMCG companies targeting rural markets in India/ Rural Shop Window:-

per capita usage

Contribution of rural market to all-India market (in terms of volume):-

Rural sales as proportion to total sales of some FMCG companies

Differences in consumer behavior in rural & urban markets

2) Conscious Decision-making:- The urban consumer may be an impulse buyer; but

4) Consensus decision making: - The urban buyers behavior is individual or at the

5) Innovative resistance to change: - Sociological distinctiveness & innate resistance

6) Different lifestyle & product usage environment: - The product-usage environment

7) Different perceptions with regard to marketing stimuli: - culture influences the

8) Brand Consciousness: - Ogilvy & mather rural communication networks head,