Chapter: 1

Introduction: Strategies
Marketers need to understand the psyche of the rural consumers and then act accordingly. Rural
marketing involves more intensive personal selling efforts compared to urban marketing. Firms
should refrain from designing goods for the urban markets and subsequently pushing them in the
rural areas. To effectively tap the rural market, a brand must associate it with the same things the
rural folks do. This can be done by utilizing the various rural folk media to reach them in their
own language and in large numbers so that the brand can be associated with the myriad rituals,
celebrations, festivals, "melas", and other activities where they assemble.
Considering the environment in which the rural market operates and other related problems, it is
possible to evolve effective strategies for rural marketing. The strategies discussed here though
not universally applicable depend upon product characteristics, the targeted segment of the rural
market, the choice of the rural area and its economic condition.

1.1 Product Strategies

Meaningful product strategies for rural market and rural consumers are discussed here.

1. Small unit and low priced packing:

Larger pack sizes are out of reach for rural consumers because of their higher price and usage
habits. This method has been tested by other products like shampoos, biscuits, pickles, Vicks five
gram tins, etc. the objective of giving small packaging’s is to keep the price low so that the entire
rural community can try. This may not be possible in all types of products except some products
such as shampoo, soaps and other cosmetics etc.

2. Designing new innovative and attractive products:

A close observation of rural household items indicates the importance of redesigning or
modifying the products. The manufacturing and marketing men can think in terms of new
product designs specially meant for rural areas keeping their lifestyles in view. The new products
should be designed in such a way that it should suit the lifestyle, needs and anxiety of the rural
consumer.

3. Designing strong and sturdy products:

Sturdiness of a product either in terms of weight or appearance is an important fact for rural
consumers. Generally a rural consumer handles every product roughly. Thus the product meant
for rural areas should be sturdy enough to stand rough handling and storage. People in rural areas
like bright flashy colors such as red, blue, green etc., and feel that products with such colors are
sturdy but they are more concerned with the utility of the item also.

4. Creating a good brand name

The rural consumers are more concerned with the brand name of the product than its utility. The
brand name awareness in the rural areas is fairly high. A brand name and logo are very essential
for rural consumers for it can be easily remembered and identified. Because rural consumers
often used to stick towards a particular product by considering its brand name.

1.1.1 Product Concept in Rural Areas

 The product is the most vital element in the market offering.

 The acceptance of the product in rural markets is determined not only by, consumer,
needs and wants, but also by the physical and social environment.

AUGUMENTED
PRODUCT

POTENTIAL
CORE BENEFIT
PRODUCT
LEVELS OF
A
PRODUCT

EXPECTED BASIC
PRODUCT PRODUCT

 MICROMAX MOBILE is an example of rural consumer. Which is launched in 2008,

targeted the rural India consumer with its feature- packed, economically priced handsets

1.1.2 Rural Product Classification

1. Fast-Moving Consumer Goods

 FMCG’S or consumablescomprises all non durables goods like toiletries, cosmetics,

foods and beverages and foot wears.
 These products are consumes quickly and purchased frequently.
 2. Consumer Durables

 It includes product like home appliances, automobiles, watches and furniture.

 The major durables players in rural markets are Usha, Bajaj, Philips, titan, godrej,
Videocon, L.G., Samsung, Hero-Honda etc.

3. Services

 Major services in rural India include healthcare, telecommunication, information

communication technology, banking insurance and education.

4. Agricultural Goods

 They are tangible goods used in farm activities.

 These includes agricultural goods such as, seeds, fertilizers, pesticides, insecticides and
implements.

1.1.3 Product Mix Decisions

 Product line- A group of closely related products that are sold to same customer groups
and marketed through same distribution channels.
 Product mix- Set of all products lines and items that a particular seller offers for sale to
buyers.
 Product length- Number of items in each product line
 Product depth- Number of variants offered in each item of product line.
 Consistency- Relation between various product line.
 Branding- Symbolic and visual elements
 Packaging and labeling
1.2 Pricing Strategies
Pricing strategies are very much linked to product strategies. Some of these strategies are
mentioned here.

1. Low cost/cheap products:

This is a common strategy being adopted widely by many manufacturing and marketing men.
Rural consumers won't like to have high-priced commodities due to their low income. So price
can be kept low by small unit packing resulting in higher sales.

2. Avoid sophisticated packing:

Simple package can be adopted which can bring down the cost as it is presently being done in the
case of biscuits. Some innovation in packing technology is very necessary for rural markets.
Sophisticated packing can be avoided as it bears extra cost which may losses the number of
consumers due to high price.

3. Refill packs/reusable packaging:

The packaging material used should preferably lend itself for reuse in rural areas. An ideal
example in this direction can be the packing of fertilizers. Now companies have started packing
fertilizers in lope or hope sacks, which are not only tamper proof but also reusable. But it would
be applicable only in case certain products.

4. Application of value engineering:

This is a technique which can be tried to evolve cheaper products by substituting the costly raw
material with the cheaper one, without sacrificing the quality or functional efficiency of the
product, for example in food industry, 'soya protein is being used instead of milk protein. Milk
protein is expensive while soya protein is cheaper but the nutrition value is same. This technique
yields itself for application in many engineering or product designed areas so that the price can
be kept at an affordable level. These areas have to be explored by manufacturing and marketing
the pricing strategy for rural market will depend upon the scope for reducing the price of the
product to suit the rural incomes and at the same time not compromising with the utility and
sturdiness of the product.

5. Provision of free frills or products along with the selling product will make an
impression among the rural buyers that the price they are paying for the product is not
high, as they are getting extra free products or services.

1.2.1 Pricing Objectives

A variety of objectives may guide pricing decision:

1. Growth in Sales: A low price can achieve the objective of increase in sales volume. A low
price is not always necessary. A right price can stimulate the desired sales increase. In practice,
price and non-price objectives are coordinated to produce the desired increase in sales.
Competitive price, if used wisely, can secure faster increase in sales than any other marketing
weapon.
 2. Market Share: Price is typically one of those factors that carries the heaviest responsibility
for improving or maintaining market share — a sensitive indicator of customer and trade
acceptance.

3. Predetermined Profit Level: Return on Investment, say 20 to 25 per cent is a common

decision in marketing. Pricing for profit is the most logical of all pricing objectives.

4. Meet or Follow Competition: Many firms desire the stabilization of price levels and
operating margins as more important than the maintenance of a certain level of short-run profits.
The price leader maintains stable prices in the industry. Follow the leader.

1.2.2 Pricing Policies

Pricing Policies Price is an important element in the marketing mix. Arrival at the right selling
price is essential in a sound marketing mix. Right price can be determined through pricing
research and by adopting the test market techniques. A price policy is the standing answer of the
firm to recurring problem of pricing. It provides guidelines to the marketing manager to evolve
appropriate pricing decisions. If competition is mainly on a price basis, then each company
generally prices its products at the same level as its competitors.

1.2.3 Types of pricing policy:

1. Right Pricing: In the long run, the best pricing policy in a competitive market is the
market based metliod of pricing. It is safer to follow the prices of important competitors
who dominate the market. Such a price policy will prevent price war, and assure normal
profits.

2. Non-Price Competition: The seller should rely more on non-price factors to capture the
consumer demand. At present in many countries business firms avoid price reduction as a
means of competition. With or without price competition, increasing emphasis is being
given on the various weapons of non price competition. Non-price competition devices
are: 1. Branding, 2. Attractive packaging, 3. Service after sale, 4. Liberal credit, 5. Free
home delivery, 6. Money-back guarantee (return of goods), 7. Sales promotion, 8.
Advertising, 9. Personal salesmanship, 10. Product improvements and innovations.

3. Conditions Favoring Premium or (Higher) Prices: 1. Higher sales promotion

expenditure is needed, 2. Production is as per order, 3. Initially small market share is
preferred, 4. Sales turnover is slow, 5. Good many ancillary services are needed, 6.
Goods are durable, 7. Package is unique. 8. Product itself is unique. 9. Customers are
rich.

4. Conditions Favoring Lower Prices: 1. Little sales promotion is necessary, 2. We have

mass-production, 3. We are ready for mass-distribution and we want larger market share,
4. Sales turnover is quick i.e., fast selling is anticipated, 5. Very few or no additional
services are needed, 6. There is no special package, and 7. We have perishable goods
demanding quick clearance. 8. Buyers are not rich.
5. Skim-the-cream Price (high Pricing): A manufacturer introducing a new product may
adopt this pricing strategy deliberately to build up the image of quality and prestige for
his new product.

6. Cost-plus or Mark-up Pricing: This method is considered the best approach to pricing.
It is based on the seller's per-unit cost of the product plus 'an additional margin of profit.
There are four items in determining the sale price: I. Cost of producing/ acquiring goods.
2. Cost of operating/selling expenses. 3. Interest, depreciation, etc. 4. Expected profit
margin-mark-up. The mark-up is indicated as a percentage of the cost of goods. The
mark-up as a percentage of selling price is a very common practice particularly in retail
trade. Cost-plus pricing is very popular in retail trade and wholesale trade. Some form of
customary mark-up pricing or cost-plus pricing is most practical in trade, as items for sale
are innumerable.

7. Discounts and Allowances: Discounts and allowances are price concessions offered to
traders or buyers in the form of deductions from the list price or from the amount of a bill
or invoice. They are forms of indirect price competition. The common forms of discounts
and allowance are: 1. Trade discount, 2. Cash discount, 3. Quantity discount, 4. Seasonal
discount, 5. Promotional discount, 6. Advertising and display allowances, 7. Freight
allowances.

8. Trade Discount: Trade discount is a kind of functional discount. It is given to the buyers
buying for resale, e.g., wholesaler or retailer, in payment for marketing functions which
these traders are expected to perform. Sellers quote price less discount rather than net
price.

9. Cash Discount: It is merely a rebate or a concession given to the trader or consumer to

encourage him to pay in full by cash or cheque within a short period of the date of the bill
or invoice. It is a deduction from the amount of the bill or invoice amount to be paid. The
period to avail the cash discount is usually 10 days.

10. Quantity Discount: In order to encourage a customer to make bulk or large purchases at
a time or to concentrate his purchases with the seller, quantity discount may be offered to
large buyers. Quantity discount can reduce the prices for bulk purchase order. These may
be even cumulative, i.e., on the total volume of purchases made during a certain period.
They are really patronage discounts.

11. Seasonal Discount: The manufacturer may offer additional seasonal discount of say 5,
10 or 15% to a dealer or a customer who places an order during the slack season. This
will ensure better use of his plant and production facilities.

12. Allowances: The manufacturer may offer promotional allowances, Eg.., advertising
allowance, window display allowance, free samples, free display materials, free training
in sales demonstration and sales talk, etc. It amounts to a price reduction of an equal
amount of service expected.
1.3 Promotion strategies

Mass media is a powerful medium of communication. It could be television, cinema, print media,
and radio and so on. The other means of mass media available are hoardings/wall paintings,
shanties/hats/melas, non-price competition, special campaigns etc. Besides these, other mass
media like hand bills and booklets, posters, stickers, banners of the schemes etc.

Following are some of the promotion strategies that can be applied in order to promote a new
product in the rural market:

1. Advertising with local ambassadors is a right choice and also advertisements can be made
colorfully as rural people like that.
2. Providing the new product as a free product along with some other products that were
already going in the market. So that, the consumers will be aware of the new product.
3. Making a tie up with the ongoing market retailers in order to enhance proper distribution
and to expand the business in the initial promotion stage. After gaining some goodwill
and market, the producer can either continue with the ongoing retail distribution or it can
open its own retail shops.
4. In the promotional stage, the goods and services can be given at low prices that would
attract the rural consumers as they often prefer low-priced commodities with higher
utility.

1.3.1 Designing Promotional Campaigns

Personal Selling

It is a process of face to face interaction between the salesperson and the prospective customer.
Through a proper training and guide, a salesman can be a valuable medium between the marketer
and the prospective customer.

A good salesperson is the one who has thorough knowledge about the product he is about to sell
and tries to strike a common point of link between the product and the customer needs.

Personal Selling in Rural Region

Most of the marketers think personal selling is not feasible in rural areas because of various
reasons ranging from scattered population to a large number of villages to be covered.

Though still not a prevalent practice adopted by the national level marketers, personal selling is
widely done by the local manufacturers of utensils, garments, edible good etc. For the marketer
to adopt personal selling as a tool of promotion in rural area, following are few of the basic
requirements that need to be present in their salesperson −
  Familiarity with the Rural Area − It is difficult for the salesperson to be familiar with
rural area. As the population of rural region is scattered, it becomes a lot more important
for the salesperson to have sufficient knowledge about rural area which he is supposed to
cover.
 Proficiency in Local Language − Fluency in the local language is another key skill that
must be present in the salesperson. It acts as a major communication point in converting
prospective customer into an actual one.
 Acquaintance with the Rural Folks − It is a common tendency among rural people that
they only pay attention to those people whom they can consider as a part of their social
group. Thus, if the salesperson belongs to the particular rural district, in that case his job
not only becomes easy but also chances of success in achieving his sales target increase
strongly.
 Be Persuasive but not Pushy − A good salesperson is one who is persuasive but not
pushy in nature. Rural people are always skeptical in nature about the new product and
strongly hesitate to purchase it due to lack of faith.
Here a salesperson needs to remove the doubts of the prospective customer and make him
believe to purchase the product. But being too pushy in his approach can ruin the chances
of sale of the product.
 Public Relations − Public relations in case of marketing promotions in case of rural areas
are highly important so as to create the formal relationship with the newly acquired
customers. Also, dissemination of information concerning the rural folk is possible only
through effective public relations.

Educating rural people about the importance of administering polio drops to children,
vaccination to mother and child, sanitation, hygiene etc. has become possible only through the
publicity health campaigns.

Sales Promotion
It is a short term tool adopted by the marketer to increase the sales of the particular product /
service in a particular area for a particular period of time.
According to marketers, sales promotion includes those sales activities that supplement both
personal selling and advertising, and coordinating. It also involves making the advertisements
effective, such as displays, shows and exhibitions and demonstrations.

Types of Sales Promotion

The following are the different types of sales promotion −

1. Push-up Sales Promotion

It is the technique where marketers persuade third parties i.e. intermediaries like dealers, retailers
etc. to stock the products of the respective company and push them towards the ultimate
customers.
Marketers started providing various incentives, pop material etc. to the intermediaries which
encourage them to sell the products to the customers. To increase product sales ratio push-up
sales promotion is the important part of promotion efforts taken up by the companies.
In case of rural marketing the companies also follow push-up sales promotion strategies. The
commonly followed push-up sales promotion strategies include −

 Free display materials − Free display materials like banners, sign boards, neon lights
etc. are distributed among dealers to attract and inform the customers about the products.
 Storage materials − Storage materials like racks, shelves, refrigerators etc. are
distributed among shopkeepers who help in visual merchandising and also aid in storing
the product.
 Demonstrations − Important technique of push-up sales promotion, free demos at
dealers’ shops inform the consumers about the handling of the product.
 Incentives to dealers − Under the push-up sales promotion special incentives are
provided to dealers on the number of units sold to the ultimate consumers.
 Lucky draw contest − It is to motivate dealers to stock the company’s products and
promote sales, and lucky draw contest are organized among dealers.
 Free gifts − It is a common strategy adopted by the companies and free gifts are often
distributed among dealers during festive seasons to increase the consumer base.
 Pull-up sales promotion − As the name suggests, pull-up sales promotion is the tool
where marketer pulls the customers towards their product through various promotional
strategies and advertising.

Customers come through schemes like Buy 1-Get 1 Free, discounts, exchange offers etc. These
schemes attract customers towards the product and the customers end up purchasing the
products. In context of rural marketing, the following pull-up sales promotional strategies can
work well −

2. Free Distribution of Samples

Distributing free samples among rural people not only popularize the product but also gain huge
acceptance among them. When the company decides to enter into new market and launch the
new product, in such cases free distribution of samples is an effective pull-up sales promotional
activity. As compared to urban consumers, the tendency to try the new product is low in case of
rural consumers because they have lack of faith about the new products. Free samples encourage
trial purchase among consumers.

3. With-pack Premiums

Here, a free product is given either inside the pack or outside the pack. This attracts the rural
customers to purchase the product. This is successful only when the free product is either
complementary or useful to the consumers. For example, a free toothbrush that comes
complementary with toothpaste.
 4. Price-off Premiums

This refers to the cut-price technique for a product. This is useful not only in case of FMCGs but
also in case of consumer durables if the discount is appropriate.

5. Money Refund Premiums

It refers to the price of the product, which is partially refunded to the consumers on the
repurchase of same product by showing of proof of previous purchase like cash memo, empty
wrapper, poly packs etc.

6. Exchange Premiums

It is quite similar to the above strategy, under which instead of refund of money a new product is
given to consumers on showing of proof of previous purchase.

7. Interactive Games

Innovative fun-filled games generate interest among the rural crowd. The winner of the game can
be rewarded with the product of the company which sponsored such games. Sometimes such
games ensure high customer involvement and also increase the interaction between the marketer
and target customers.

8. Fairs and Exhibitions

Fairs are a part of rural people’s life. For the rural people, they are the source of entertainment
and a good opportunity to launch their products for the marketers in the rural market. It has mass
appeal as several villagers come to fairs.
Customers may be attracted by using the mass media like organizing folk songs competition,
folk dances, magic shows, puppetry shows, street theatre, acrobatic skills, juggler, etc. Another
important thing is the use of vibrant colors in the company’s stalls. This pulls the crowd towards
buying the product.

9. Village Haats

Haats are the weekly markets from where rural people buy the items of daily necessities,
garments, farm inputs etc. They are the source for rural people and a place of social gettogether.
The existence of haats can be traced back to ancient times — the times of Chandragupta Maurya.

Haats provide to the marketers an opportunity to display their products. Consumers are ready to
try the product by overcoming all inhibitions and can get the touch and feel of the product and
this will further generate sales as most of the people come to the haats with an intention to buy.
 10. Melas

Melas are again the essential element of India’s culture and pull masses. In a trade mela, one can
find variety of products. Melas are held usually in festive seasons like Dussehra, Diwali, Holi,
Eid etc. During melas, marketers get to interact with a large number of consumers and encourage
for trial purchase. These melas help the marketers target large audience.

11. Mandis

Mandis are the place for agricultural produce and inputs. Mandis can be a good platform for
manufacturers of agri-inputs ─ both durables and non-durables. Durable are tractors, pump sets,
threshers etc. Non-durable includes seeds, fertilizers etc.
1.4 Distribution strategies
Rural India is widely populated and so it is obvious that the distribution costs are high. Here, one
needs to deploy innovative approaches in order to bring down the costs.
Most manufacturers and marketing men do have a distribution arrangement for village with a
population of at least 5000 people. While it is essential to formulate specific strategies for
distribution in rural areas, the characteristics of the product, its shelf life and other factors have to
be kept in mind. The distribution strategies that are specifically designed for rural areas are
through co-operative societies, public distribution system, multi-purpose distribution centers,
etc.some other distribution strategies that can be adopted in rural marketing were:

1. Using Delivery vans to deliver products to nook and corner of villages.

2. Localized way of distributions such as melas, street outlets etc:

To succeed in Indian rural market the producers or marketers have to reach the nook and the
corner of the country. They have to reach the "local Paan wala, Local Baniya" only then they can
succeed. MNC shoe giants, Adidas, Reebok, and Nike started with exclusive stores but soon they
realized that they do not enjoy much Brand Equity in India, and to capture the market share in
India they later preferred Local market shoe sellers.

3. Conduction of special sales programmers’ through temporary street stalls or showrooms

in rural areas:

This is one of the strategies widely adopted by automobile marketers. This strategy is suitable for
high end products.

4. Direct distributions by opening outlets in villages avoiding intermediaries that will also
reduce price

5. By offering certain discounts, the local rural distributors can be made to brainwash the
consumers about the new product as rural consumers believes the word of the familiar
person in purchasing a product. Thus risk involved in sales and distribution of the new
product can be somewhat reduced.