IMPACT OF INDIAN PRODUCTS AND MNC PRODUCTS

ON RURAL CONSUMER
(A study done in the context of FMCG goods)

INTRODUCTION-
“The Indian growth story is now spreading itself to India's hinterlands.
The Rural Consumer Market, which grew 25 per cent in 2008, is
expected to reach US$ 425 billion in 2010-11 with 720-790 million
customers”-- STUDY OF CII-TECHNOPARK

The rural market is currently worth approximately USD9 billion in

consumers spending in the FMCG space annually. The study findings show
that food categories are currently driving the bulk of the additional USD91
billion into the marketplace by 2025.
On the consumption front, a third of rural consumers are eating biscuits for
breakfast and one in six rural buyers of hair dye now uses colors other than
black to indulge in the trend of externalized beauty that is picking up fast in
rural areas.
India is one of the oldest civilizations with a variety and rich cultural
heritage.
During the period of 55 years of its independence, it has achieved
multifaceted
Socio-economic progress and is now the tenth industrialized country in
the world and
Only the sixth nation to have gone into outer space to conquer nature
for the benefit of
The people.
India has 28 states and 7 union territories with over 1,027
million Population of which more than 65 per cent are literate.
India is making all efforts to be counted among the developed
nations of the world.
Considerable attention is thus being paid to the application of
technology, media and other mediums for development of
infrastructure and human resource for meeting national needs.
The companies are trying to trigger growth in rural areas. They are identifying the fact
that rural people are now in the better position with disposable income. The low rate
finance availability has also increased the affordability of purchasing the costly products
by the rural people. Marketer should understand the price sensitivity of a consumer in a
rural area. In the duration of recession certain sectors depends on export industry,
and manufacturing industry are highly affected. But the rural market which has no
dependency on export industry was totally untouchable recession.

Indian Marketers on rural marketing have two understanding

(1) The urban metro products and marketing products can be implemented in rural
markets with some or no change.
(2) The rural marketing required the separate skills and techniques from its urban counter
part.
The Marketers have following facilities to make them believe in accepting the truth
that rural markets are different in so many terms.
(ii) Low priced products can be more successful in rural markets because the low
purchasing powers in rural markets.
(iii) Rural consumers have homogeneous needs, economic conditions and problems.
(iv)The rural markets can be worked with the different media environment as opposed to
press, film, radio and other urban centric media exposure.
How reality does affect the planning of marketers? Do villagers have same attitude like
urban consumers? The question arises for the management of rural marketing effects in a
significant manner so than companies can enter in the rural market with the definite goals
and targets but not for a short term period but for longer duration.
(1) Rural Market-
70% of India's population lives in 627000 villages in rural areas. 90% of the rural
population concentrated in villages with a population of less than 2000, with
agriculture being the main business. This simply shows the great potentiality rural
India has to bring the much - needed volume- driven growth. This brings a boon in
disguise for the FMCG Company who has already reached the plateau of their
business in urban India.
As per the National Council for Applied Economic Research (NCAER) study, there
are as many 'middle income and above' households in the rural areas as there are in
the urban areas. There are almost twice as many' lower middle income' households in
rural areas as in the urban areas. At the highest income level there are 2.3 million
urban households as against 1.6 million households in rural areas. According to the
NCAER projections, the number of middle and high-income households in rural India
is expected to grow from 80 million to 111 million by 2007. In urban India, the same
is expected to grow from 46 million to 59 million. Thus, the absolute size India is
expected to be doubles that of urban India.
The improved agricultural growth is expected to boost rural demand, through not at
too sizzling a rate. Moreover, the price drop in personal products, after the recent
excise duty reductions, in also expected to drive consumption. "Better agricultural
yields will give farmers more spending power, making the rural markets bullish,"
says an analyst.
As a result, FMCG companies are preparing rural marketing program that is expected
to result in a marked growth in the consumption of the company's products in the
rural market.
Example-
(1) HUL adopting three-pronged marketing strategy- new price points, sizes and
awareness campaigns for its detergents and soaps segment to augment rural growth.
The Indian established Industries have the advantages, which MNC don't enjoy in this
regard. The strong Indian brands have strong brand equity, consumer demand-pull
and efficient and dedicated dealer network which have been created over a period of
time. The rural market has a grip of strong country shops, which affect the sale of
various products in rural market.
(2) Colgate has done this experiment with launching of sachet packs for rural
markets. As well as chick shampoo launched their products in Rs.1 sachet in rural
market that is a successful story.

FAST MOVING CONSUMER GOODS (FMCG) — AN OVERVIEW

Products which have a quick turnover, and relatively low cost are known as Fast
Moving Consumer Goods (FMCG). FMCG products are those that get replaced
within a year.
Examples of FMCG generally include a wide range of frequently purchased
consumer products such as toiletries, soap, cosmetics, tooth cleaning products,
shaving products and detergents, as well as other non-durables such as
glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also
include pharmaceuticals, consumer electronics, packaged food products, soft
drinks, tissue paper, and chocolate bars.
India’s FMCG sector is the fourth largest sector in the economy and creates
employment for more than three million people in downstream activities. Its
principal constituents are Household Care, Personal Care and Food & Beverages. The
total FMCG market is in excess of Rs.85,000 Crores. It is currently growing at double
digit growth rate and is expected to maintain a high growth rate. FMCG Industry is
characterized by a well established distribution network, low penetration levels, low
operating cost, lower per capita consumption and intense competition between the
organized and unorganized segments.
The Rs 85,000-crore Indian FMCG industry is expected to register a healthy growth
in the third quarter of 2008-09 despite the economic downturn. The industry is
expected to register a 15% growth in Q3 2008-09 as compared to the corresponding
period last year. Unlike other sectors, the FMCG industry did not slow down since Q2
2008. The industry is doing pretty well, bucking the trend. As it is meeting the every-
day demands of consumers, it will continue to grow. In the last two months, input
costs have come down and this will reflect in Q3 and Q4 results.
Market share movements indicate that companies such as Marico Ltd and Nestle
India Ltd, with domination in their key categories, have improved their market shares
and outperformed peers in the FMCG sector. This has been also aided by the lack of
competition in the respective categories. Single product leaders such as Colgate
Palmolive India Ltd and Britannia Industries Ltd have also witnessed strength in
their respective categories, aided by innovations and strong distribution. Strong
players in the economy segment like Godrej Consumer Products Ltd in soaps and
Dabur in toothpastes have also posted market share improvement, with revived
According to figures released by market researcher Nielsen, demand for personal care
products grew faster in rural areas than urban areas during the period January-May
2010. In shampoos, rural demand grew by 10.7 per cent in value terms, while in
urban markets, it rose by 6.8 per cent. Similarly, toothpaste sales grew by 9.1 per cent
in rural India and by 4.4 per cent in urban markets.
Several fast moving consumer goods (FMCG) companies such as Godrej Consumer
Products, Dabur, Marico and Hindustan Unilever (HUL) have increased their hiring
in rural India and small towns in order to establish a local connect and increase
visibility. Swiss FMCG giant, Nestle plans to make further inroads into the rural
markets. The company has asked its sales team to deliver "6,000 new sales points
every month in rural areas" to expand its presence in Indian villages, according to
Antonio Helio Waszyk, Chairman and Managing Director, Nestle India.
LOCATION -----
Ekari village in Etawah district of Uttar Pradesh is the
location of research.
Research Objectives

The research paper consists of following objectives:

(1) To analyze the impact of mass media promotion on rural consumers.
(2) Compare the effectiveness of promotion strategy of few brands in rural markets
with their promotion strategies in urban market.
(3) To measure the success of rural marketing campaign of few brands in Terms
of consumer appreciation.
(4) To study the determinants of specification factors which can decide the success
the rural promotion strategy?
(5) To evaluate the effects of adopting the specific brand ambassadors in the rural
marketing context.

Literature review
In the field of consumer purchasing behavior, not much has been explored on the
influence of economic development on consumer behavior (Maheswaran and Shavitt,
2000), though it is often suggested that the level of economic development affects the
aspirations and goals of consumers (Sinha1994). This research purpose would be
served if a comparison on the impact of promotion strategies on consumer’s behavior
could be conducted between a rich region and a poor one within a developing
country, where the level of economic development tends to be defined along the
urban-rural line. Researchers addressing emerging market issues have often targeted
urban consumers in those countries (Maheswaran, 1984). Little attention has been
paid to rural consumers’ buying behavior (Home, 2002). Rural consumers probably
represent the more enduring cultural traditions of those emerging economies and may
provide unexplored cultural perspectives on economic development (Maheswaran and
Shavitt, 2000). A comparison between rural and urban consumers within an emerging
market such as India will offer much needed insights into the effects of economic
development on consumer lifestyles.
The Economic Times (2003), "The rural market likes it strong" the strength of rural
markets for Indian companies. Financial express, June 19, 2000 has published the
strategy about FMCG majors, HUL, Marico Industries, Colgate Palmolive have
formula had for rural markets.

Given the Literacy scenario in to consideration the promotion of Brands in rural

markets requires the special measures. Due to the social and backward condition
the personal selling efforts have a challenging role to play in this regard. The word of
mouth is an important message carrier in rural areas. Infect the opinion leaders are the
most influencing part of promotion strategy of rural promotion efforts. The
experience of agricultural input industry can act as a guideline for the marketing
efforts of consumer durable and non-durable companies. Relevance of Mass Media is
also a very important factor. Doordarshan had already acquired high penetration in
rural households.

Now the cable and other Channels have also penetrated in rural households. The
newspapers and other printed Media are also gaining strategy but their role is still
secondary in this regard.
An appropriate segmentation of the highly heterogeneous rural market and
identification of the needs and works of different segments will form the very basis
for rural market strategies. For rural market, it will be ideal to think of strategies from
the marketing mix point of view, main strategies are related to product, price, place
and promotion which are described as follows.

(A)Promotion strategies
Mass media is a powerful medium of communication. It could be television, cinema,
print media, 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.
For disseminating the information, related to agricultural and other rural industries
products, the government should circulate pamphlets either to panchayati raj office or
to schools where it can be documented for the reference.

(B)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 price and usage
habits. This method has been tested by other products like shampoos, biscuits,
pickles, vicks five gram tins, etc.
In the strategy of keeping the low priced packed the objective is to keep the price low
so that the entire rural community can try. This may not be possible in all types of
products, but wherever this can be resorted to, the market is bound to expand.

2. New product designs

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.

3. Sturdy products
Sturdiness of a product either in terms of weight or appearance is an important fact
for rural consumers. 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. Brand name
The rural consumers are more concerned with the utility of the products. The brand
name awareness in the rural areas is fairly high. A brand name and/or logo is very
essential for rural consumers for it can be easily remembered.

B. 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. Price can be kept low by small unit packings.

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.

3. Refill packs/reusable packaging

such measures has a significant impact on the rural market. By such technology also
the price can be reduced. In addition 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 LDPE or
HDPE sacks, which are not only tamper proof but also reusable.

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 men in the
context of rural markets.

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.