This action might not be possible to undo. Are you sure you want to continue?
A Report Submitted in partial fulfillment of the Requirements for the award of the Degree of
MASTER OF BUSINEES ADMINISTRATION OF THE P.B. SIDDHARTHA PG DEPARTMENT Submitted by G. RAVI ROLL NO: Y85338
DEPARTEMENT OF BUSINESS ADMINISTRATON P.B. SIDDHARTHA COLLEGE OF ARTS&SCIENCE
(Affiliated to Acharya Nagarjuna University)
VIJAYAWADA (2008 – 2010)
Rural India constitutes ‘the heart of India’, generating more than half the national income. According to the National Council of Applied Economic Research (NCAER), with about 74% of its population living in its villages. India has perhaps the largest potential rural market in the world. A potential of 742 million rural consumers live in 6,38365 villages across India. Rising incomes, improving infrastructure, and favorable government policies offer huge potential for rural marketing.
“If you see a woman in a village milking a cow, do you see an opportunity?
but that is exactly where Dr. Varghese kurien saw an opportunity and it gave birth to one of the most successful organizations in India-Amul .”
The above data [table 1] indicates. these results has 3 . the Indian rural market with its vast demand base. On account of the green revolution the rural areas are consuming a large quantity of not just the essential commodities but premium products as well. The younger generation in rural areas is now spending more on personal care and grooming products. brought a socioeconomic revolution in Indian villages.The need to look at rural markets: The “Green Revolution” has in turn. offers great opportunities to companies. FMCGs demand in India nearly 53% comes from the rural market. For consumer durables the figure is 59%.
implying that if the rural income rise by 1%.000cr. going by the significant share contributed by rural areas to the total revenue of several leading consumer product companies.evidently helped. rural consumption is expected to nearly three times of what it is today. According to FICCI. [Table-2] Rural markets are already proving vital for company’s growth. 4 . clearly indicating that these markets can not be ignored by big players. then the spending power of consumers will increase by about Rs.10. by the end of 2025. Industry analysts have projected that urban households will grow by 4% while their rural counterparts are expected to grow 11% by 2009-10.
000 population and Class-IV towns with 10. define Class-II and III towns that are rural.000-99. most FMCG and consumer durable companies.000 towns in the country. there are more than 4. Class-II towns with 50. rural What is Rural Market? According to the Census of India 2001.000-50. Class-III towns with 20.999 population.There is no denying the fact that Indian market is the fastest growing market in the world and the fact is that about 60% of the market considered market is yet to turn into a real market.[table-3] 5 . class-I towns with one lake and above population .999 population.000-19. It has classified them into six categories. It is mainly Hindustan Unilever and ITC.
Rural Marketing Challenges: • • • • Poor Infrastructure Non-availability of shops High levels of poverty Unemployment 6 .From this above data one can analyze the economics of cost involved in rural distribution coverage.
structural. Swaminathan of the swaminathan Research Foundation. MS. Indian consumers are poor but not backward. This is possible if these areas are supported by adequate funds. The future lies with those companies who see the poor as their customers. The following section deals with how MNC’s and local companies have successfully established themselves in the rural market. 7 .• • • • Poor literacy rate Poor media penetration Skeptical customers (less use new brand ) Rigid social customs According to Dr. Effective rural marketing is one and only solution to reach the BOP segment. economic and social aspects are addressed in a holistic manner. Companies should focus on creative solution and product engineering to reduce their costs and offer tremendous ‘life time value’ to the ‘Bottom of the Pyramid’ customers. rural areas can only be developed if the financial. Rural Marketing Strategies: Rural marketing concept is a customer-centered ‘sence and respond’ philosophy. equipments. infrastructure and education.
Case 1: Nokia 1100 8 . Low price. Product Strategy: The rural consumer is very conscious about getting ‘value for money’. high quality and multiple uses is basic principles rural product design.
clocks and flash lights by the rural customers. Nokia had to stop its production of 1100 because as its own product has become its toughest competitor. Nokia’s low-end cell phones are used as radios.000 sets in the very first year. succeeding globally” Case 3: HUL Breeze 2-in-1 HUL developed a combined soap and shampoo that was cost-effective and also less harsh on hair than ordinary soaps. Strategy: “digital convergence at the bottom of market” Case 2 : LG sampoorna TV LG Electronics launched a customized TV sampoorna’.00. Tamil and Bengali. it facilitated on screen display in vernacular language like Hindi. alarm . HUL launched the new soap-cum shampoo ‘Breeze 2-in-1’ Strategy: “value-added product would create a loyal customer” 9 . selling 1. A more important aspect of customization is to make TV set which can appeal to local needs. Strategy: “thinking locally.Nokia 1100 has so penetrated in to the rural market.
Pure-it is available at economical price for the rural consumer as there is no clean drinking water in villages. 10 . Strategy: “Corporate social responsibility means come up with business models to cater to the BOP” Case 5: TATA Nano Tata Motors launched ultra low cost Nano. Avoid the marketing myopia. Strategy: “we needed to create a safer journey of transporting a family” Suggestions: • • Innovative product designs and packaging. which means the costumer will have the same need but will want the new product.Case 4: HUL pure-it [a water purifier brand] HUL launched a innovative product ‘pure-it’ a water Purifier brand. hence its creates a new segment of people of buying car. It is a victory for all those who have been advocating making available cheaper products for customers at the BOP. Nano is a low-end ‘rural car’.
11 .• Application of value engineering. Marketers must often understanding rural customer’s needs and aspirations even better than customers themselves do and creating products and services that meet existing and latent needs. • • Using chinese product design strategy and raw material. The rural markets being intensely price-sensitive in comparison to urban markets. reaching at a lower cost is a major challenge.  Price Strategy: Rural markets are low price high volume growth markets. A fair amount of research is required to understand the latent needs and desires of rural customers and provide suitable products. This technique does not sacrifice the functional efficiency of a product but lower the product price. Be care full on product duplicates and using security features. now and in the future. which means costly metal being replaced by cheaper reinforced plastic.
Case 1: Nirma Nirma’s yellow detergent powder. the value being delivered for a small Case 4: P&G price cut strategy P&G in 2004 started price cut strategy in their detergent brands.money” Case 2: Cavinkare’s Chik shampoo Cavinkare launched Chik in 50 paise sachets. 20” to shackle entry barriers appeal to Indian customers. Cavinkare targeted rural and small town customers who used soaps to wash their hair. It create a ‘sachet revolution’. Strategy: “value.Rs. “highlighting price”. so Mc Donald’s has been highlighting the “Happy price menu. P&G’s increase in the market share was 12 .for. Strategy: . Nirma’s low price policy has penetrated into the deepest rural markets in India.a mass.market Phenomenon. Strategy: “low unit price packs. it became the market leader in the rural markets with over 50% market share.” (LUP) Case 3: Mc Donald’s The Indian customers seek high value for every rupee spent .
lead to Case 5: Britannia Tiger biscuits Britannia also tasted success because of small affordable packaging of ‘Tiger’ biscuits it is specially design to the rural market. Strategy: bring in the required ‘Economies of Scale’ which would profitability. Strategy: “low price strategy is begun to appeal target segment” Case 6: Nestlé’s Maggi Nestle’s rural initiatives have largely been based on Price-led initiatives. Strategy: “small pack .more at the cost of the low-priced detergents. There was a 200% increase in Tide after the price cut .5. it’s helping the poor become consumers.lower price” Case 7: Marico parachute Marico launched ‘parachute mini’ a bottle shaped 13 . Brand such as Maggi noodles are priced at Rs. It helped Nestle in making in roads in to rural market.
small pack being sold at an MRP of RS. the company can design basic models minus frills to save cost. Second. starting Use psychological tricky pricing strategies. product. number pricing etc. Using value-based pricing strategy . Companies should focus on creative solutions and product engineering to reduce their cost. That means method of odd Effective total quality management is helps to low price high quality with customer and end with product.  Promotion Strategy: 14 . 20 ml parachute a RS 5 that enables loose oil users ad to parachute.1. Strategy: “consumers to trail out the products with very little risk” Suggestions: • • • • Use backward and forward integration. That means fixing of price.
To effectively tap the rural markets. Strategy: spreading a social message “each one has aimed at the changing someone’s life for better” Case 2: Coca-cola Coca-cola ad ‘thanda matlab coca-cola’ caught attention of the rural consumers so much. logos. visuals and colors. Strategy: “Using a renowned celebrity from in rural background” Case 3: Godrej 15 .The challenge is to create communication that would help the rural consumer in recognizing brands. Case 1: Idea cellular Idea’s aggressive promotion campaigns ‘what an idea sirjee’ ad creates a real rural feel came through Strong advertisement. Aamir khan playing foot sic with village bells. a brand must associate with their culture and personality.
MRF use the communication through wall paintings in villages association with the muscleman symbol.(i. Strategy: “lifebuoy has always been positioned on the platform of health and hygiene” . Case 5: MRF Bullock cart Tyres MRF introduced nylon tyres for bullock carts with real life pahalwans..Godrej uses radio to reach to the local people in their language and push its soap in interior and remote areas.000 villages. Strategy: “low-cost marketing technique to gain maximum result” Case 4: HUL Lifebuoy HUL launched a direct rural contact program called ‘Lifebuoy Swasthya Chetana’ campaign.e. Case 6: HUL Vim 16 .Pahalwan=Muscleman).The result was that the MRF bullock cart tyres became the brand leader in this segment . Strategy: “Rural consumers understands symbols better and looks for endorsement by icons” . made sales goes up by 20% in 17.
were demolished by a chyawanprash ball. In this campaigns is succeed people washing utensils with sand are being educated to shift to dish washing bars. Strategy: “value for money need not necessarily mean cheap” Suggestions: 17 . its communication and image must respect Indian values and serve to uphold them”. Strategy: “For a brand to succeed in India.HUL launched a dish washing bar Vim. symbolizing various diseases. Strategy: “Brand awareness creates people using local unbranded products to national brands” Case 7: Dabur Chyawanprash Dabur Chyawanprash was able communicate its core benefits of energy and immunity by involving locals in a game of bowling wherein. campaign to communicate the message of ‘getting more for your money’ to housewives and this message is well received by them. Case 8: HUL Surf Surf used the ‘Lalita ji. HUL Started to communicated the brand in rural area through public challenging campaigns. the nine pins.
Provide social outlet campaigns. which gathers valuable feedback from satisfied brand they choose. Its creates a ‘trust factors’ to the consumers.  Distribution strategy: 18 . To capture the local sprit in the communication. customers and also display the total amount saved by consumers with the product World-of-mouth communication strategy works better in rural markets as these markets enjoy limited reach media. what Be care full on retail margins other wise they promoted local brands. that means feel and talk mode at heats. Using local language. That means a rural consumer is not in a Developed a website. melas and mandis. they would perceive them as necessities.• • • • • • impact. Once people become familiar with these products. the outlet provide free to any one. Patience is the name of the game. hurry and you can take your time in communicating the message. Face-to-face ‘below the line’ touch.
Coca-Cola provides low-cost ice boxes to the small distributors in rural areas because of the lack of the electricity. The distribution structure involves stock points in feeder towns to service these retail outlets at the village levels. managing logistics and controlling marketing communication are major impediments for entering rural markets. the pioneer and a large player in India’s FMCG market. distributed HUL’s products in villages using unconventional transport like ‘bullock carts’. HUL is the first company to step into the Indian rural marketing. ‘tractors’ and cycles.Cola Coca -Cola is a pioneer company in distribution network. where you can not reach” Suggestions: 19 . HUL launched ‘operation stream line’.Planning physical distribution. even water is not available” Case 2: HUL Hindustan unilever. Coca-Cola has evolved a ‘hub and spoke’ distribution model for effectively reaching and serving rural markets. Strategy: “HUL product can reach a place. In this marketing strategy a wake up call for coke’s rural focus. Strategy: “Coke is available where. Case 1: Coca . Today HUL’s products touch the lives of two out of every three Indians.
but in this battle both consumers and companies are winners. Stop depending on research number. 20 . In our country. Then it is easy to distribute and also its increase the local sprit. It has compelled marketing whizkids to go rural. Thus. Rural shopping malls act as a two-way supply Use a combination of wholesalers and retailers to penetrate every nook and chain. Go and meet up with a million villagers and ask what they want.cum social responsibility projects such as ‘shakti and e-choupal’ respectively. The revamped PDS places more emphasis on reaching remote rural areas of hills and tribaks. • Tie’up with public distribution system (Fair Price Shops). While selling goods to the farmers and also buy their farm produce. Conclusion: A silent revolution is sweeping the Indian countryside. So FMCG companies collaborated with the PDS to utilize its well-established sales and distribution network in the rural markets. Unilever and ITC are working towards increasing their visibility and reach through marketing .• Best solution for enter into the rural markets. Create the products and services that is relevant to their needs. the public distribution system is fairly well organized. ‘Go Rural’ seems to the latest slogan. it is a win-win situation. corner of rural market. Going paces ahead of small packs and sachets’ the corporate world is now coming out with ‘Rural Malls’ and ‘Self help groups’ as channel partners to promote consumer products in rural India. • • Develop rural shopping malls. that is the company should start the production in rural areas. The marketing battle fields has shifted from the cities to the villages. it is quite clear value-for-money offerings companies could convert luxuries in to necessities for the Indian rural consumers.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.