A

MINI PROJECT REPORT

ON

“ISSUES IN RURAL MARKETING AT FMCG GOODS"

SUBMITTED IN PARTIAL FULFILLMENT FOR THE REQUIREMENTS OF THE AWARD

OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
(2020-22)
(Dr. A P J Abdul Kalam Technical University, Lucknow)

Submitted By Under the guidance of

VISHAL KHARI Name of the Faculty :-Prof. Phalak Verma
Father's Name - Mukesh Khari
Batch of 2021-23

LLOYD INSTITUTE OF MANAGEMENT & TECHNOLOGY

PLOT NO 11, KNOWLEDGE PARK-2, GREATER NOIDA-201306 (UP) (12 TNR+Bold)
 CERTIFICATE OF ORIGINALITY

(To be filled in by the student in his / her handwriting)

I VISHAL KHARI of Batch 2021-23 is a fulltime bonafide student of first year of MBA
Program of Lloyd Business School, Greater Noida. I hereby certify that this mini project
work carried out by me at "ISSUES IN RURAL MARKETING AT FMCG GOODS "
the report submitted in partial fulfillment of the requirements of the program is an original
work of mine under the guidance of the faculty mentor Prof. Phalak Verma and is not
based or reproduced from any existing work of any other person or on any earlier work
undertaken at any other time or for any other purpose, and has not been submitted
anywhere else at any time

(Student's Signature)
Date: ________________

(Faculty Mentor's Signature)

Date: ___________________
 ACKNOWLEDGEMENT

This project is the outcome of sincere efforts, hard work and constant guidance of not only me but
a number of individuals. First and foremost, I would like to thank LIMT, GREATER NOIDA
for giving me the platform to work with such a prestigious company in the financial sector. I am
thankful to my faculty guide Prof. Phalak Verma for providing me help and support throughout
the Project Report period.
I owe a debt of gratitude to my faculty guide who not only gave me valuable inputs about the
industry but was a continuous source of inspiration during these months, without whom this
Project was never such a great success.
Last but not the least I would like to thank all my Faculty members, friends and family members
who have helped me directly or indirectly in the completion of the project.

VISHAL KHARI
 DECLARATION

The project report on “ISSUES IN RURAL MARKETING AT FMCG GOODS." has been

undertaken as a partial fulfillment of the requirement for the award of the degree of Master of

Business Administration of Dr. APJ AKTU, Lucknow. I hereby declare that this Project is my

original work and the analysis and findings are for academic purposes only. This project has not

been submitted by the any student earlier to any other institution/ university.

VISHAL KHARI
 CONTENTS

CHAPTER-I PAGE NO.

 INTRODUCTION 5-7
 EVOLUTION OF INDIAN RURAL MARKETING 8-9
 DIFFERENCE BETWEEN RURAL AND URBAN MARKETING 10
 ANALYSIS OF THE RURAL MARKET IN INDIA 11-20
 MARKETING COMMUNICATION IN RURAL MARKETS 21-34

CHAPTER-2
DESIGN ANALYSIS 35-38
CHAPTER-3
IDEA GENERATION/STAGE OF CREATIVITY 39-46

CHAPTER-4
IMPLEMENTATION 47-48

CHAPTER-5
CONCLUSIONS 49

CHAPTER-6
BIBLIOGRAPHY 50

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 INTRODUCTION

This research paper is an analysis on the importance of packaging, how packaging

features in the global market, the important parameters required in packaging of products.
The paper is also based on the creative and functional aspects involved in the packaging
of products and how it affects the demand of FMCG goods. A focus on the quality of the
product has to go hand in hand with a focus on how it has to be visually appealing to the
consumers. The quality of packaging, the texture of the packaging material, the visual
impact of packaging, the size of the package, all these have a direct impact on the
demand for the product. The functional element in packaging depends on the distribution
network, the country in which the product is sold, and the type of products and the
creative element in them is based on the brand, the image, the association of color and
category of targeted customers, The research is based on direct observation and analysis
of consumer durables. Most of the contents in this research paper are based on
observation of packaged products and analysis by the author(s). The paper was confined
to the observation of FMCG’s in the Indian context. The objective of the paper is to
create awareness on the innovative parameters involved in packaging goods and how it
influences customers.

The Indian rural market with its vast size and demand base offers great opportunities to
marketers. Two-thirds of countries consumers live in rural areas and almost half of the
national income is generated here. It is only natural that rural markets form an important
part of the total market of India. Our nation is classified in around 450 districts, and
approximately 630000 villages which can be sorted in different parameters such as
literacy levels, accessibility, income levels, penetration, distances from nearest towns,
etc.

The success of a brand in the Indian rural market is as unpredictable as rain. It has always
been difficult to gauge the rural market. Many brands, which should have been

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successful, have failed miserably. Often, people attribute rural market success to luck.
Therefore, marketers need to understand the social dynamics and attitude variations
within each village though nationally it follows a consistent pattern.

While the rural market certainly offers a big attraction to marketers, it would be naive to
think that any company can easily enter the market and walk away with sizable share.
The market bristles with variety of problems. The main problems in rural marketing are:
 Physical Distribution
 Channel Management
 Promotion and Marketing Communication
The problems of physical distribution and channel management adversely affect the
service as well as the cost aspect. The existent market structure consists of primary rural
market and retail sales outlet. The structure involves stock points in feeder towns to
service these retail outlets at the village levels. But it becomes difficult maintaining the
required service level in the delivery of the product at retail level.

One of the ways could be using company delivery vans which can serve two purposes- it
can take the products to the customers in every nook and corner of the market and it also
enables the firm to establish direct contact with them and thereby facilitate sales
promotion. However, only the bigwigs can adopt this channel. The companies with
relatively fewer resources can go in for syndicated distribution where a tie-up between
non-competitive marketers can be established to facilitate distribution.

As a rule, rural marketing involves more intensive personal selling efforts compared to
urban marketing. Marketers need to understand the psyche of the rural consumers and
then act accordingly. To effectively tap the rural market a brand must associate itself 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.

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One very fine example can be quoted of Escorts where they focussed on deeper
penetration. In September-98 they established rural marketing sales. They did not rely on
T.V or press advertisements rather concentrated on focussed approach depending on
geographical and market parameters like fares, melas etc. Looking at the ‘kuchha’ roads
of village they positioned their mobike as tough vehicle. Their advertisements showed
Dharmendra riding Escort with the punchline ‘Jandar Sawari, Shandar Sawari’. Thus,
they achieved whopping sales of 95000 vehicles annually.

One more example, which can be quoted in this regard, is of HLL. A year back HLL
started ‘Operation Bharat’ to tap the rural markets. Under this operation it passed out
low–priced sample packets of its toothpaste, fairness cream, Clinic plus shampoo, and
Ponds cream to twenty million households.

Thus, looking at the challenges and the opportunities which rural markets offer to the
marketers it can be said that the future is very promising for those who can understand
the dynamics of rural markets and exploit them to their best advantage.

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 EVOLUTION OF INDIAN RURAL MARKETING

STAGE I STAGE II STAGE III

Stages of Agricultural Rural Inputs
Rural Marketing
Evolution Marketing Marketing

Flow of
Rural to Urban Urban to Rural Urban /Rural to Rural
Goods
Consumer
Agriculture Inputs
Durables,
like
Type of FMCG,
Agricultural Produce Seeds,
Products Consumables for
Machines,
Consumption and
Fertilisers etc
Production etc

RURAL CLASSIFICATION

CONSUMER MARKET INDUSTRIAL MARKET SERVICES MARKETS

All kinds of Agricultural and Repairs,
Consumables, Food Allied Activities, Transport,
Products, Farming, Banking,
Toiletries, Cottage Industries, Credit,
Cosmetics, Health Centre, Insurance,
Textiles, School, Healthcare,
Footwear etc Cooperative, Education,
Watches, Panchayat, Communication,
Bicycles, Office etc. Power etc.
Radio, Seeds,
TV, Fertilisers,
Kitchen Appliances, Pesticides,
Furniture, Tractors,
Sewing Machine, Animal Feed, etc
Two Wheeler etc.

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 ATTRACTIVENESS OF RURAL MARKET

- LARGE POPULATION

- RAISING PROSPERITY

- GROWTH IN CONSUMPTION

- LIFE-STYLE CHANGES

- LIFE CYCLE ADVANTAGES

- MARKET GROWTH RATES HIGHER THAN URBAN

- RURAL MARKETING IS NOT EXPENSIVE

- REMOTENESS IS NO LONGER A PROBLEM.

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 DIFFERENCE BETWEEN RURAL AND URBAN MARKETING

URBAN RURAL
Aspect
Marketing and
Marketing and Societal Development
Philosophy Societal, Green,
Relationship
Relationship
Market
Demand High Low
Competition Organised Sector Unorganized Sector
Consumers
Location Concentrated Widely Spread
Literacy High Low
Income High Low
Expenditure Planned, Even Seasonal
Needs High Level Low Level
Innovation Adoption Faster Slow
Products
Awareness High Low
Concept Known Less Known
Positioning Easy Difficult
Usage Method Easily Grasped Difficult to Grasp
Quality Preference Good Moderate
Features Important Less Important
Price
Sensitive Yes Very Much
Level Desired Medium-High Low-Medium
Distribution
Channels Multi Vill. Shops, Shandies, Haats, Yatras
Transport Facilities Good Average
Product Availability High Limited
Promotion
Advertising All TV, Radio, Multi-lingual
Personal Selling Door 2 Door Freqntly Occasionally
Sales Promotion All Gifts, Discounts, Demo
Publicity Good Opportunities Low

ANALYSIS OF THE RURAL MARKET IN INDIA

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Rural market of India consists of about 80% of the population of the country. Apparently
in terms of the number of people, the Indian rural market is almost twice as large as the
entire market of USA or Russia. This market is not only large, but very much scattered
geographically. It is also as diverse as it is scattered. It exhibits linguistic, regional and
cultural diversities and economic disparities, and hence, it can easily be considered as
more complex than the market of a continent as a whole.

The rural market scene has undergone a steady and encouraging change over the last
three decades. In spite of several barriers to faster growth, the growth has not only been
quantitative, but also qualitative. This change has been possible because of new
employment opportunities and new sources of income made available through rural
development programmes which have resulted in green and white revolutions and a
revolution in rising expectations of rural masses.

The rural buyers in India provide a tremendous range of. contradictions and paradoxes
which baffles the urban-based marketing people and, even more so, the foreign observers.
Rural consumers are far less homogeneous than their urban counterparts and differ from
region to region.

The rural market is made up of two broad components i.e., the market for consumption
goods and the market for agricultural inputs. The rural markets are by and large less
exploited. Another important feature of the rural market is that at least in the present
context, it is largely agriculture oriented. Green revolution and the resultant prosperity are
confined to a few select areas in the country. As a result, the effective demand for
consumer items has not spread all over rural India. Income generated from the money
sent by the members of their families employed in towns and abroad also helped the rural
people to spend more on consumer goods.

In spite of the increasing rate of growth in urban population through migration and other
channels and the consequent increase in their purchasing power, the rural market still
offers opportunities which are vast and yet relatively untapped.

It has been noted that the rural consumer is discerning and the rural market vibrant. At
the current rate of growth, it will soon outstrip urban market. Surveys and audits for a
number of consumer products and services have, over the years, clearly highlighted the
emerging importance of this sector.

The rural market is not sleeping any longer. 'Go Rural' seems to be the latest slogan.
Rural consumption of all products is growing by leaps and bounds, since the urban
market has reached near saturation levels in several categories.

In short, the sheer size of the rural population will serve as a large potential demand base
for a variety of products:
The new agricultural strategy of applying science and technology to farming will
increasingly trigger off a chain reaction of increased generation of wealth, productivity
income and consumption, which provide the key for the emerging rural demand.

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 FACTORS CONTRIBUTING TO RURAL BOOM

The marketing boom in the rural areas is caused by such factors as increased
discretionary income, marketable surplus of product, like vegetables and eggs, rural
development schemes, unproved infrastructure, increased retailing and retailers,
increased awareness with information explosion, expanding TV networks, liberalised
Government policies for rural development, emphasis on rural markets by companies,
new cadre of entrepreneurship, competitive and creative sales promotion, packaging
revolution and, changing life styles in the rural areas.

PROBLEMS OF RURAL MARKETING

In the Indian context, rural marketing is a complex subject. For a business organization,
rural marketing is beset with several problems. The prices of rural marketing pose many
problems due to the vastness of the country and a high potentiality for providing an
effective marketing system.

Besides, a few other problems stem from the underdeveloped markets and illiterate and
gullible people constitute the major segment of the markets. More purchasing power is
not enough. It is not enough to have some consumption pioneers. The activation of
buying on a wide scale is an essential precondition for the exploitation of the rural
market.

It is now unanimously accepted that the rural salesmanship in India has been insufficient
and inadequate and out of proportion to the agriculture revolution. This calls for strong
bias in favour of raising the rural demand as against the urban demand. The traditional
marketing activities of promotion, distribution, sales and servicing, undertaken so far in
the urban and semi-urban contexts are to be extended to cover a much wider area in a
rural environment by introducing appropriate innovation, selection and adoption. There
are about 5,76,000 villages in India, 79 percent of them with a population of less then
1,000 each.

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 MAJOR PROBLEMS IN TAPPING THE RURAL MARKET

1. High distribution costs

2. High initial market development expenditure
3. Inability of the small retailer to carry stock without adequate credit facility.
4. Generating effective demand for manufactured foods
5. Wholesale and dealer network problems
6. Mass communication and promotion problems
7. Banking and credit problems
8. Management and sales managing problems.
9. Market research problems
10. Inadequate infrastructure facilities (lack of physical distribution, roads warehouses
and media availability)
11. Highly dispersed and thinly populated markets
12. Low per capita and poor standards of living, social, economic, and cultural
backwardness of the rural masses
13. Low level of exposure to different product categories and product brands
14. Cultural gap between urban based marketers and rural consumers.

The development of the rural market will involve additional cost both in terms of
promotion and distribution. In rural marketing, often it is not promotion of a brand that is
crucial, but creating an awareness concerning a particular product field, for instance,
fertilizers and pesticides. This can be seen in the example of Excel Crop Care Ltd. given
below, which is been successful in implementing the promotional campaign to launch its
product and create awareness about the company and its products.

Urban and semi-urban based salesmen are not able to tap the full potential in the villages.
Here, it may be suggested that the marketers may select and employ the educated
unemployed from villages.

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 BRAND DEVELOPMENT A RESPONSIBILITY OF EACH TEAM MEMBER

How and why

 Visibility
 Consistency and Pattern
 Verbalization
 Conscious correlation each time every time
 Visual symbol that can be identified with by both Farmer and the Excellite

 Distinct, different, and unique enough to stand out from the crowd.
 Owning up and pride in presentation by each member.
 Use of Props, standardized in all 251 Villages adopted.
 Transfer of pride of ownership from Excel to Customer Farmer
 ‘Excel and Me’ must finally symbolize the real meaning of the project -the
coming together of two people with a common goal towards their mutual
advantage.

When and why

 Each ‘Excel and Me’ farmer meeting must have a pattern that is followed each
time every time.
 Each prop must be used with the Branding objective in mind – that Farmer
recognises, owns up and identifies with.
 The message of ‘Excel and Me’ must be simplified to mean “Excel is with me all
the way”, every time he sees the Logo in any form.
 The props are so designed to reach out to him at his place of work, at his home, in
his village, in his child’s school – all familiar and warm to his heart.
 Each prop is different from others used so far, the objective being different.
 Unique in look and use, personal in style it is meant to register as only unique to
this project of Excel – ‘Excel Me’.

 It is our responsibly is to ensure that each prop is used to sum up the effort of the
whole team, building a warm and responsive trusting relationship with the
customer – Farmer.

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Shades for Village Panchayat or Panchayat Samiti (Sitting)

We will build shades in select villages for the Panchayat sittings. This will be an effective
tool as all the villagers and farmers get together for the village panchayat sittings once a
week/month or as per decided. This will expose them to the Brand/Company name every
time they come for these sessions.

Adopting a Village

This will be one of the major long term strategies and will require lots of effort in terms
of time, money and even human efforts. But the looking at the cost benefit analysis,
company can just cannot afford to leave this opportunity this will help to build a strong
rapport with the villagers and farmers.

Demonstrations/Melas/Dramas/Plays

There can be demonstrations done in the form plays, and road shows, etc showing the
super hero CELCRON or MERA 71 slaughtering the insects or weeds. This sought of
plays are more effective and excite the villagers more than other medium of promotions.

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 FEATURES OF RURAL MARKETING IN INDIA

Marketing according to a leading management theories Peter Drucker can be put in this
way “The aim of marketing is to know and understand the customer so well that the
product or service fits him and sell itself."

We feel that the above quote is the gist of marketing, be it in rural areas or urban areas,
western world or developing world. Marketing in nothing but creating customers and thus
its concepts remain the same. But, due to the differences in the needs, buying behaviour,
values and aspirations of the customers the marketing concepts have to be modified to be
successful. The unique features of rural India which call for special attention and thus,
subsequent changes in the application of marketing concepts are as follows:

a) Traditional Outlook: The rural consumer values old customs and tradition. Basic
cultural values have not yet faded in rural India. Buying decisions are highly influenced
by social customs, traditions and beliefs in the rural markets.

b) Levels of Literacy: -The literacy rate is low in rural areas as compared to urban areas.
This comes in way of the marketer in promoting the product. Advertising is very
expensive making it difficult to communicate with the target audience.

c) Lack of Proper Communication and infrastructure facilities: -Nearly fifty percent

of the villages in the country do not have all weather roads. The Infrastructure Facilities
like roads, warehouses, communication system, financial facilities are inadequate in rural
areas making physical distribution becomes costly.

d) Many Languages and Dialects: -The number of languages and dialects vary widely
from state to state region to region and probably from district to district. Even though the
numbers of recognized languages are only 16, the dialects are estimated to be around 850.

e) Low Per Capita Income: -Even though about 33-35% of gross domestic product is
generated in the rural areas it is shared by 74% of the population. Hence the per capita
incomes are low compared to the urban areas. Normally the rural consumers spent a
majority of their income in basic necessities, which makes them very price sensitive.

The marketing mix in the case of Indian rural markets consists of 4P’s i.e. Product, Price,
Promotion, Place combined with 1 P that is Packaging and one R i.e. Retailer as special
focus areas. However, at the base of this marketing mix will be 2 E’s of Education and
Empowerment.

The traditional marketing hypothesis tends to ignore the requirement of a developing

country’s rural needs. The concept of marketing has to be taken in conjunction with
economic, psychological and social implications. Hence, the concept of Mega-Marketing
where all such factors are taken into consideration while developing the Marketing Mix is
more relevant to succeed and build enduring brands. In rural India’s case the two most
important considerations are Education and Empowerment opportunities which

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traditional approaches of marketing fail to acknowledge. Then only the opportunity
provided by the rural market can be fully tapped. (SEE APPENDIX 1)

Customization

Retailer

Packaging

Product, Place, Price and Promotion

Education Empowerment

The Marketing Mix for Rural India

1. Product
“Authentic marketing is the art of identifying and understanding customer needs
and creating solutions that deliver satisfaction to the customers, profits to the
producers and benefits for the stakeholders.” ................... Philip Kotler
The product offerings have to be not only customized but also at a different plane
altogether in case of rural markets. The various product levels as outlined by Philips
Kotler, namely Core Benefit, Basic Product, Expected product, augmented product and
Potential Product should be adequately taken into consideration and the product offerings
should be henceforth customized according to the needs.
Potential
Product

Augmented
Product

Expected
Product

Basic
Product

Core
Benefit

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Most of the times in the urban market the product is offered at the augmented product
level where the objective of the product offering is to exceed the customer expectation.
But in the rural markets of India which have been till date characterized by the absence
of the choice, sub-standard products and cheap clones of their urban counterparts; the
immediate level to be operated is the Expected product where his expectations are met.
Also, due to the low level of incomes and literacy levels, it is imperative that the basic
needs of the consumer are met. For e.g. Today, in India, 70 percent of the shampoo
market is in sachets. Forty percent of rural workers are daily wage earners and have a
daily purchase habit and could do so because of low unit price packs. In real terms
because of these packs, shampoos cost less than 14 years ago. Here the product is
meeting the basic level of need and providing the benefit of convenience and economy
without enthralling or overtly exceeding his expectation.

In case of durable goods the rural customers essentially look for a product that is frill-
free, sturdy and long lasting and in case of consumer goods he looks for products that
operate at the basic level and can provide additional benefits in synchronization with their
habits and lifestyle. For e.g. success of HLL in the soap category indicate the need to new
product development after listening to customer’s needs and not blindly applying the
urban solutions to rural problems. (SEE APPENDIX 2)

2. Promotion: Effective Communication

“If you're trying to persuade people to do something, or buy something, it seems to
me you should use their language, the language in which they think.”-David Ogilvy
Companies cannot rely on conventional advertising techniques in India’s rural areas
where only one in every three households owns a television set and more than half of all
villagers are illiterate. Instead, companies need to turn to more innovative methods of
advertising to reach their potential customer base. Also what appeals to the urban
customer may not appeal to the rural customer due to varying lifestyles. So again, even if
the media reaches him, there might not be an impact as it may fail to attract him as fails
to connect to it due to the lifestyles being different. Few of the available options in the
traditional media are

Puppetry,
Folk Theater & Song,
Wall Painting, ‹ Demonstration, Posters,
Agricultural Games,
NGO’s network

The need for innovative means of communication in rural area can be appreciated by the
case study (SEE APPENDIX 3) where advertisement on hand pumps and ponds helped
in selling more soaps to rural customers.

Customization: Combining the above two points we would like to stress the need to
concentrate on both product development and communication in order to win the mind
space of the average rural Indian. Again a concept touted by the marketing gurus

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regarding product and promotion strategies in International markets (analogy extendable
to domestic companies moving from urban to rural areas as well) can be used.

Product
Do not change Adapt Develop new
Product Product Product
Do not change Straight Product
Promotion Extension Adaptation
Promotion Product
Adapt Communication Dual Invention
Promotion Adaptation Adaptation

In order to achieve success company should avoid straight extension. Rather some form
of adaptation be it in preferably product or communication or both. In case of deep
pockets, product inventions suited for Indian conditions would be able to generate more
returns rather then a simple copied strategy from abroad or urban markets.

3. Place: Physical Distribution and Channel Management

For most companies wanting to enter the rural markets,
distribution poses a serious problem. Distribution costs and
non availability of retail outlets are major problems faced by
the marketers. The various options in distribution in the rural
markets, which will be out of the ambit proposed traditionally
by the marketing gurus would be:-

a.) Rural Marketing Vehicle (RMV) Marketers need to

make more on-ground contact with their target audience as
well as make demonstration of products as consumers in rural
markets rely on the 'touch and feel' experience. One of the
ways could be using company delivery vans which can serve
both the purposes.

b.) Melas and Haats:-According to the Indian Market

Research Bureau, around 8000 melas are held in rural India
every year and annual sales at melas amount to Rs.3,500
crore. Besides these melas, rural markets have the practice of
fixing specific days in a week as Market Days when exchange
of goods and services are carried out. Also, every region
consisting of several villages is generally served by one
satellite town where people prefer to go to buy their durable
commodities. Marketing managers can use these feeder towns
they will easily be able to cover a large section of the rural
population.

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The need for innovative distribution techniques to reengineer
the existing distribution processes can be appreciated by
studying the Project streamline as used by HLL in increasing
its reach by adding sub-stockists in its distribution (SEE
APPENDIX 4)

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4. Pricing the product
A significant portion of the rural population is paid in daily wages. Daily wage earners
tend to have little stock of money, and therefore tend to make purchases only to meet
their daily needs. The implication is that pack sizes and price points are critical to sales,
and importantly, that rural consumers view the purchase-tradeoff dilemma across a much
wider range of product categories. As a result, the nature of competition is much greater;
a beverage manufacturer is not only competing with other manufacturers in its category,
but also other products that consumers may consider one-off luxury purchases such as
shampoo. So marketer will have to examine method by which he can make the product
more affordable. In the case of consumer durable one way is to work through rural bank
and offer higher purchase terms to consumer. In short, the Value for money is the most
important concept that will differentiate the successful brand from the rest.

As explained above in the diagram, a budget seeking consumer in the rural India, takes
into consideration first of all the budget available to him and then warranty and after sales
service before settling on the brand name and model. Thus, the concept of the product
fitting into one’s budget is most important consideration while making a purchase
decision.

5. The 5 the ‘P’ OF MARKETING-i.e. Packaging

The reason for putting packaging out of the product as a special focus area is that due to
low literacy levels the importance of symbols and packaging become more important in
having a high brand recall (SEE APPNDIX 5 for case on Asian Paints). Thus, after the
4 P’s of marketing, it is 5th P which is packaging going to play a key role in rural markets.
Also since the rural customers are usually daily wage earners and they don’t have
monthly incomes like the ones in the urban areas have. So the packaging is in smaller

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 MARKETING COMMUNICATION IN RURAL MARKETS

Marketing communication and promotion too, poses problems in rural markets. There
are many constraints emanating from the profile of the audience and the availability of
media. Some problems are:

The literacy rate among the rural consumers being low, the printed word has limited
use in the rural context.

Rural communication is expensive because every villages is different, so customized

ads are required and also more exposure is required.

Heterogeneous Market
Rural market cannot be taken as one homogeneous entry. The rural consumers of India
are also vastly diverse in term of religion, social, cultural and linguistic factors.
Development index points for each state is different.

Primitive Stage
Subsistence consumption orientation Low knowledge of consumer goods No first-
generation buyers’ Low motivation to look for new consumer products Low purchase
aspiration for new consumer products Product utility perceived as illusionary than real
Negative valence of consumer products high Caste head as reference person

Demand -Seasonal and Agriculture Dependent

Primarily rural income is dependent on agriculture. Therefore, the income is dependent
on good monsoons and harvest. The demand for consumer products too therefore is
seasonal. This creates a problem as marketers cannot determine accurately how much
goods to produce and supply. Even the timing of harvest differs from village to village
which creates lots of uncertainly for marketers.

Some points to be kept in mind and considered before launch of products in rural
markets are:
- Need for vision and optimism by the companies to enter rural markets.
- A thorough market research before entering the rural markets to identify the
opportunities and also to understand the product specifications required by the rural
market.

What is required by the rural market is a good quality functional product no frills. The
presentation of the product must build identification with the rural consumers. Try and
convert users of local brands with your brand. Availability of the product is very
important. The product must be made available in as many as outlets possible. It has
been observed that majority of products are straight away towards the rural marketers
without the rural consumers which is wrong. Knowing your consumer well is important
for rural marketing too.

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 AVAILABILITY

The first challenge is to ensure availability of the product or service. India's 627,000
villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas,
finding them is not easy. However, given the poor state of roads, it is an even greater
challenge to regularly reach products to the far-flung villages. Any serious marketer must
strive to reach at least 13,113 villages with a population of more than 5,000. Marketers
must trade off the distribution cost with incremental market penetration. Over the years,
India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong
distribution system which helps its brands reach the interiors of the rural market. To
service remote village, stockists use autorickshaws, bullock-carts and even boats in the
backwaters of Kerala. Coca-Cola, which considers rural India as a future growth driver,
has evolved a hub and spoke distribution model to reach the villages. To ensure full
loads, the company depot supplies, twice a week, large distributors which who act as
hubs. These distributors appoint and supply, once a week, smaller distributors in
adjoining areas. LG Electronics defines all cities and towns other than the seven metros
cities as rural and semi-urban market. To tap these unexplored country markets, LG has
set up 45 area offices and 59 rural/remote area offices.

AFFORDABILITY

The second challenge is to ensure affordability of the product or service. With low
disposable incomes, products need to be affordable to the rural consumer, most of whom
are on daily wages. Some companies have addressed the affordability problem by
introducing small unit packs. Godrej recently introduced three brands of Cinthol, Fair
Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya
Pradesh, Bihar and Uttar Pradesh — the so-called `Bimaru' States.

Hindustan Lever, among the first MNCs to realise the potential of India's rural market,
has launched a variant of its largest selling soap brand, Lifebuoy at Rs 2 for 50 gm. The
move is mainly targeted at the rural market. Coca-Cola has addressed the affordability
issue by introducing the returnable 200-ml glass bottle priced at Rs 5. The initiative has
paid off: Eighty per cent of new drinkers now come from the rural markets. Coca-Cola
has also introduced Sunfill, a powdered soft-drink concentrate. The instant and ready-to-
mix Sunfill is available in a single-serve sachet of 25 gm priced at Rs 2 and mutiserve
sachet of 200 gm priced at Rs 15.

ACCEPTABILITY

The third challenge is to gain acceptability for the product or service. Therefore, there is a
need to offer products that suit the rural market. One company which has reaped rich
dividends by doing so is LG Electronics. In 1998, it developed a customised TV for the
rural market and christened it Sampoorna. It was a runway hit selling 100,000 sets in the
very first year. Because of the lack of electricity and refrigerators in the rural areas, Coca-

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Cola provides low-cost ice boxes — a tin box for new outlets and thermocol box for
seasonal outlets.

The insurance companies that have tailor-made products for the rural market have
performed well. HDFC Standard LIFE topped private insurers by selling policies worth
Rs 3.5 crore in total premia. The company tied up with non-governmental organisations
and offered reasonably-priced policies in the nature of group insurance covers.

AWARENESS

With large parts of rural India inaccessible to conventional advertising media — only 41
per cent rural households have access to TV — building awareness is another challenge.
Fortunately, however, the rural consumer has the same likes as the urban consumer —
movies and music — and for both the urban and rural consumer, the family is the key
unit of identity. However, the rural consumer expressions differ from his urban
counterpart. Outing for the former is confined to local fairs and festivals and TV viewing
is confined to the state-owned Doordarshan. Consumption of branded products is treated
as a special treat or indulgence.

The key dilemma for MNCs eager to tap the large and fast-growing rural market is
whether they can do so without hurting the company's profit margins. Mr Carlo Donati,
Chairman and Managing-Director, Nestle, while admitting that his company's product
portfolio is essentially designed for urban consumers, cautions companies from plunging
headlong into the rural market as capturing rural consumers can be expensive. "Any
generalisation" says Mr Donati, "about rural India could be wrong and one should focus
on high GDP growth areas, be it urban, semi-urban or rural."

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 ADVERTISING IN RURAL INDIA
LANGUAGE, MARKETING COMMUNICATION, AND CONSUMERISM

 A dramatic change is in progress. Villagers who used to crack open peanut M & M
candies, eat the nut and throw away the shell are now demanding chocolate candies that
will melt in their mouths, not in their hands. Charcoal-cleaned teeth are a rare sight; so is
the case with twigs of niim (neem) and babul (babool) tree. Today, the ultra bright shine
of Colgate or some other international brand of toothpaste holds more appeal than the
traditional methods of cleaning teeth. Even the native expressions of cleaning teeth, such
as daatun karnaa and musaag lagaanaa, are endangered to being replaced by new
expressions such as paste karnaa, 'to brush teeth with paste'. Even a simple query such as:
Where are you from? is not free from the overtones of marketization and globalization in
rural discourse. Consumerism and globalization is invading parts of India where, as some
would venture to say, time seems to have ceased for centuries.

These villages and small towns, which were once inconsequential dots on maps, are now
getting the attention of global marketing giants and media planners. Thanks to
globalization, economic liberalization, IT revolution, Indian diaspora, female power, and
improving infrastructure, middle class rural India today has more disposable income than
urban India. Rural marketing is gaining new heights in addition to rural advertising. 

Rural India represents the heart of India. Approximately 80% of India lives in over half a
million villages (627,000), generating more than half of the national income. Based on
the interviews with consumers, media giants, and analysis of case studies, following
insights can be derived:
 Various facets of rural media (conventional and non-conventional) and integrated
marketing communication. In addition to rural market discourse, media forms
such as wall paintings, calendar advertising, outdoor advertising, print, radio and
television advertising.
 Art of crafting messages to meet rural tastes and sensibilities. In particular,
uniquely Indian media forms such as video van technology, which has changed
the face of not only marketing but also political campaigning. Rural markets
(haat) which are the mobile McDonald's or Walmarts of India.
 Targeting women and religious groups in addition to rural population.
 Marketing taboo products such as 'bidi', cigarettes, sanitary supplies, and other
such products.
 Globalization and its effects on product naming, product monitoring, rural
discourse and media forms.
 Creativity and deception, together with guidelines for advertisers and marketers.
 Information structures and logic of rural ads.
 Ads as a social barometer of changing relationships and value systems.

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 CHANNEL POWER

The rural consumers interact directly with their retail salespersons who has a strong
conviction power and whose recommendations carry weight. The owners' relationship
with customers is based on an understanding of their needs and buying habits and is
cemented by the retailer extending credit. Some of the successful manufacturers
creatively develop new revenue activities for the rural retailer. United Phosphorous
Limited (UPL), an Indian crop protection company, realized that in its rural markets
small farmers were not applying pesticide at all, or applying it inappropriately due to the
lack of application equipment. The capital cost of the equipment (mounted pumps and
dispensers that cost up to $3000) was placed out of reach of small farmers and most rural
retailers. UPL designed a program in which it arranged for bank loans for its rural
retailers to purchase application equipment and demonstrated to their retailers the
additional revenue possibilities from renting this equipment to small farmers. The result
was an added revenue stream for rural retailers.

PRICE PROMOTION

In an occasional effort to capture volume sale, multinational brands use price promotions
that often yield dramatic, if temporary, sales increases in the rural areas. Their large
volume increases reveal a potentially large market in the villages that remains untapped,
just below the actual price points. To penetrate this market and generate sustainable
volume sales, a permanent product entry at the lower price point is required. Failure to
recognize the potentially huge market of the villages that lies below the surface of
international price points can even place the premium branded business at risk.

TRAVAILS IN DISTRIBUTION

In spite of recognizing the potential of this vast market of 700 million, marketers are
often unable to cater to it because of lack of adequate infrastructure. The distances
between villages, the terrain and the lack of pucca roads connecting the places act as
impediments for them to reach their customers. But once if they overcome these hassles
and reach those remote bazaars to be first on the shelf in the product category, they
develop a privileged relationship with the retailer that offers them a tremendous
competitive advantage. Rural retailers are far less specialized than their urban
counterparts and carry a wider range of products. Since frequent delivery is not possible
in their part of the world, they tend to carry only a single brand in each product category.
And, usually, the brands that are first on the rural shelves become synonymous with
product category and are difficult to dislodge. For instance, Maggi noodles, the brand that
created the category of instant noodles, reached the rural shelves before anyone else and
remained the market leader ever since. Thus, a drive down the rugged countryside, sans
electricity and other modern facilities, is, surely, torturous. But the pain is worth bearing.

27 | P a g e
RURAL MEDIA

Urban consumers shop daily and have 365 opportunities a year to switch brands while the
rural purchasers who buy their goods in weekly haats have only 54. Attempts to reach
rural consumers, even once during the purchase cycle to ensure repeat purchase, make
point of purchase advertising and trade push indispensable. This requires a significant
reorientation in the allocation of funds across media. For example, outdoor advertising
accounts for over 7% of all media expenditures in India, while it only accounts for 0.8%
in USA.

Rural buyers living in small isolated groups distributed across vast distances have limited
access to the broadcast media. The existence of a multiplicity of languages and varying
level of illiteracy complicates the task of communication further. To overcome some of
these challenges, Unilever pioneered the concept of video vans that travel from village to
village screening films in the local language, interspersed with advertisements for
Unilever's products. The company also provides product usage demonstrations to the
captive audience because written instructions on the pack may be illegible to the
consumers who are either illiterate or do not understand the dialect.

Where mass media is used, variability can, at times, back fire. On re-entering India in the
1990s, Coca Cola decided to reinvest massively on a TV advertising campaign. It opted
for slick commercials, rich in colour, with high production values, but the effect was
somewhere lost on a market where 60% of all TVs are still black and white.

However, in the recent past, the improved technology has allowed the cable and satellite
networks to increase their reach across the countryside thus exposing a rural consumer to
a lifestyle that was beyond his dreams. And this increasing awareness has led to a
significant change in his buying behaviour and consumption patterns.

While the urban market is getting increasingly competitive and saturated, the rural market
is blooming with increase in the disposable incomes of the households, thus promising a
far better scope for growth for marketers. Hence, with the shifting dynamics of the
present-day market situation, now it is the turn of the rural consumers to dictate the
terms. And this reinforces the need for marketers to formulate a well-designed strategy to
feel the pulse and to tackle the mystic rural market.

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 METHODOLOGY

1. RESEARCH METHODOLOGY

The study carried out was exploratory in nature as it tried to explore the rural market
conducive to find out the issues in the rural market.
CONSTRUCTION OF RESEARCH PLAN
Date source : Primary data
Research approach : Survey
Research instrument: Questionnaire (structured and Non-disguised)

2. SAMPLING PLAN
Sample Unit : Marketers
Sample size : 50
Sample procedure : Respondents were selected from different areas of NCR

3. CONTACT METHOD PERSONAL SURVEY PROCEDURE

A sample size of 50 dealers and Marketers was taken from NCR. Structured
questionnaire was used to collect information/views of the dealers about Rural vis a vis
Urban Market.
Many manufacturers were hesitant to enter into rural markets as they believed that rural
folks cannot be convinced of the uses of products and hence a need for branded products
cannot be created in rural areas. But many manufacturers believed that this was only a
myth. Marketing to the rural consumer is quite possible –only that it has to be done that
right way.

DATA SOURCE - PRIMARY

All the information collected is absolutely original and primary in nature. No published
material was available of. All the dealers and marketers were personally interviewed and
all information was dully filled in front of them. The data collected serves a very specific
and definite objective.

Consumers
Consumer is the corner stone of any Industry. The objective of business is to earn profit
by satisfying the needs and wants of the consumer. Modern business firms try to
maximise profit by maximising consumer satisfaction.
MYTH-- A company must offer the highest -quality product.
TRUTH-- This myth has a corollary: The higher the quality, the greater the chances of
Marketing success.

Advertising
Majority of the dealers are also not satisfied with the advertising strategies adopted by
Indian companies. The major mistake committed by the Indian advertisement is that the
advertisements most of the time don’t serve the purpose.

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Umbrella

 An attractive large sized umbrella with the logo printed right around the umbrella
head.
 Light in weight and handy to carry.
 Each VAP will own one.
 He is meant to use it in Sun and Rain as a shelter if necessary…
 More important as a visible prop to publicize that “Excel and me” VAP is visiting
the village, the farm or the farmer’s house.
 He will be recognized by his umbrella that will be always open (as far as
possible).
 He may have the farmers sit under it to ensure that it is used as the tool that is
meant to be.
 Be, be responsible and use the tool effectively.

Torans:

 Use of large sized, waterproof Torans with different uses as described in the
pictures,
 Be innovative in usage.
 Have farmers decorate their homes, trees, meeting venues prior to meetings.
 Offer farmers a Toran each for their doors as incentives or freely – as situations
offer.
 Objective to leave behind a trace of ‘Excel and Me’ being active in that territory,
capture more villages’ attention and increase their curiosity.
 Hand each Toran with a sense of pride so that the farmer feels proud to carry
home this decorative of OWNERSHIP – Not as a freebie the success of this prop
lies in your hands. Use it effectively.

T-shirts

 Green colour T-shirt with logo printed in bold on the back and the pocket.
 T-shirt for each V.A.P and Development Head on visit to his territory.
 Objective is clearly to be seen, recognized, and responded to by each member of
the “Excel & Me “project but also other villages not yet adopted by the project.

Unique Banner:

 Stand up Board banner.

 Light weight, easy to carry.
 Each V.A.P must carry every day, every visit.
 To be used at meeting or gatherings of more that 6-8 farmers
 Can be propped up by bricks in case of strong winds
 A must use, every time, every meeting.

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Prescription Pad:

 A pad with all Excel products Brands that are on a look-alike Doctors prescription
Pad.
 Instruction on the dosage, solution for pest disease, soil problems can be jotted
down and handed to farmer.
 Products can be ticked off for recognition of brand.
 Ensure Excel brands loyalty wherever solution offers such a possibility.
 Dealer has less chance to convert customer to select other brands if farmer use P.P
to ensure that the brand referred to what he needs.
 Our only surety that hard work at field level accrues subtly in business for Excel
[also]
 Never forget that this objective most certainly exists and this tool is your best
weapon – use it well.

The Subtle but sure Objective for the Excellite of ‘Excel and ME’
 Farmer customer is your friend – he must see you as his friend.
 Build his trust. Build his confidence. Earn his love.
 Be honest and fair in your dealings. Offer solutions. Not Brands.
 Don’t talk Excel Products – talk “Excel and Me”
 Be open to learn from him. Give him pride in sharing with others what you learnt
from him.
 Solution may mean other than Excel brands / other molecules. No harm done.
With fair solutions - you will earn his trust because no other companies dare to
that.
 He will see the difference and will soon demand for your brand only.
 That is his loyalty. Be patient and earn it slowly.
 When that happens – use your prescription pad to ensure that solutions accrue into
business for Excel.
 This is Tried and tested .it is up to you to prove it again and again to your self and
to “ Excel & Me “

Information - the key to success

 A knowledgeable Field Person is like a well armed soldier
 Information flow within the team will be the crucial determinant of the success of
the project
 We aim to share crop and crop care data across states and territories
 We aim to implement the best of each area to other areas to help the Farmer
benefit to the maximum and motivate our army of Excellite
 For this we have worked out a plan for creating an instant Internet based
communication system which will be
- Accessible anywhere
- Speedy & instantaneous
- Reliable

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 - Interactive
- Secure
 This will be a microsite which will be accessible from the Excel website
www.excelcropcare.com

Features on the Microsite

 This is private website for Excel & Me Team only and registration will be
allowed only to team members
 Data will be updated constantly
 All members can upload data and information directly, however the moderator
will check data and edit if necessary before making it accessible
 Some data will be downloadable and printable, other parts may be classified
 A Chat room will be created for members to talk to each other directly
 E-mail facility will be created, which can be utilised by members
 Messages and circulars will be passed on by H.Q / Development using this
facility.

and finally……

 Other things being equal… a person would rather do business with a friend…
well known management statement
 By the year 2006, we aim to have over 50,000 friends in 251 villages as a part of
the movement that is Excel & Me and loyal customers of Excel products
 We aim to become a focussed agri-input and services company who can fulfil the
requirements of our farmer friends
 We will be known by the laboratories that we have in the field owned by excel ant
the loyal Farmer customer of ‘Excel & Me’

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How to use this Microsite
 Suppose, the Field person in Haryana wants some information on effectiveness of
Endocel in rose cultivation, …
 He can log in, go to the home page, where he has an option to go to the
information section
 The information will be stored by product categories and by crop categories

How to use this Microsite

 On choosing the crop category, he will go to all the options on crops, from which
he can select the required category. Sub menus will be shown in each category as
drop boxes

Archives/Crop Category

 For roses, go to floriculture, which will take you to all the types of flowers on
which we have information to share
 Alternately, we can also have drop boxes which will take you to the required data
 At any time, person will have the option to go back to main menu or to go to
product category

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 Archives/Crops/Floricultur

Home Page
o When you go to the site, you will find an INTRO text that is on the first page.
o On the Right column of the page, you will find pictures of Excel & Me branding
& collaterals
o On the Left column, you will find a “Member Login” button. Once you click on
this, you will be taken to the next screen

Member Login page

o When you go to the site, you will have to enter the following information
Username & Password.
o If the above information is incorrect, then you will NOT be able to access the
information.

India map page

If you have entered the Username & Password correctly, then another page with India
map would open up. On this page, you would notice the following buttons on the Left
column
1. Home
2. District Area
3. Conference Room
4. Users
5. Message Board
6. Email to Admin

Home button
o If you click on this, you would go back to the 1st page of the website. If you want
to access any information in the site, you will have to go to the Member Login
section & enter your data again

District Area button

o If you click on this, you will have access to the India map. Click on any particular
state of India that you are interested to find information about.
Another map of the particular state would open up. You can then select a
particular District, which you are interested in.Then it would open that particular
district info where you will find complete information

Conference Room button

If you click on this, on the screen, you will find 2 options

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 1. Start new discussion
o If you click on it, you can enter your communication by typing the subject
of your discussion in ‘Subject’ area & then typing your information in the
‘Your Message’ area
2. Browse old discussions
o If you click on it, you will find all the old conversations that Excel & Me
program members have had with each other or communication shared
online. If you want so desire, you can also add your comments to anyone’s
communication by clicking on it & then typing your Subject & Comments.

Users button
• If you click on this, you will see a list of Users who access this site. This would
help you know who are the people you are communicating to.
• Also if you want to edit your profile by adding your photograph, etc , you can do
that by clicking on your name in the User List

Message Board button

• This would show you any message that the Administrator has put up for
everyone’s attention. This is the same message that you saw when you logged in
the site

Email to Admin button

• If you want to send email to the Program Administrator, based at Mumbai HQ,
then click on this. You will just have to type the message & send

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Promoting the concept
• Excel & Me has to spread to every farmer in India over the next two years but
We must build the need to join in the farmer’s mind:
• For that, we plan to use word of mouth and other forms of promotion extensively

Farm Roadside Board Farm Identification Markers

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 CHAPTER 2

DESIGN ANALYSIS OF FMCS GOODS

RED: Passion, strength, power, love, energy.
WHITE: Innocence, youth, peace, purity, humility.
Coca Cola only have a logo type. I mean that their signet is the curvy script and roll-off-
the-tongue name. Their logo is not iconic, because their logo doesn’t have a relation to
what they sell. But because almost everybody knows them, everyone knows that they sell
cola. Coca-Cola possesses one of the most recognized brand designs in history. It's not
only the trademark design of that white typeface on that particular shade of red that
makes it iconic, but also the equally famous bottle. Sometimes they also write a slogan in
their commercials.
They have changed their logo many times. Since 1969 they have used the red and white
logo as we known it. They have only changed it a couple a times in connection with a
campaign. An example is when they changed the “Coca Cola” to different names.
It also have a Danish flag between the o and l. However, the company has never used this
in any of its marketing campaigns in the Scandinavian country, and not everyone knows
it’s there. Coca cola was the one that inspired Santa Claus to be red and white, in their
commercial in 1931. They made a Christmas campaign, where Santa Claus should drink
a cola. The cartoonist of this commercial made the drink a full year drink, and he also
strengthened the idea of how the modern Santa would look.

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Calendar

This is an effective type of prop which can be used for promotional purposes in the rural
areas since the farmers value things which are of great utility to them. These calendars
help in reminding the farmers about the company & products which are printed thereon.

Playing Cards

Playing cards can be another very effective tool of advertising. Playing cards may be
distributed freely or compliments given with every purchase. The brand name printed on
the cards help in registering the product & company name in the subconscious minds of
the farmers as they continually use the cards. These playing cards will be used by them
during the time they take rest in the afternoon after lunch or the break between two shifts.
These cards may be used even by their children.

Carry Bags

Carry bags may be freely distributed in villages so that the brand becomes a household
name. This can be either done through distributing the bags to the local kiranawala’s or to
those shops keeping our products.

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Innovative Brick Game

We may develop a brick game or block game for the children of the farmers. These brick
game will have our Company’s name & products name printed on it. These blocks depict
the disease on one side and the company’s product that helps eradicate it on the other.
This help educating the children at an early age about the various diseases & their cures.
This is a long term strategy that aims at instilling the brand name in the minds of the
children.

CELCRON HELIOTHIS

EXCEL CROP

CARE LTD

Hand Fans

Hand fans having the Brand names printed on them will be distributed. These fans will be
used by women at home & by the farmers in the field.

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Adopting a Village

This will be one of the major long term strategies and will require lots of effort in terms
of time, money and even human efforts. But the looking at the cost benefit analysis,
company can just cannot afford to leave this opportunity this will help to build a strong
rapport with the villagers and farmers.

Demonstrations/Melas/Dramas/Plays

There can be demonstrations done in the form plays, and road shows, etc showing the
super hero CELCRON or MERA 71 slaughtering the insects or weeds. This sought of
plays are more effective and excite the villagers more than other medium of promotions.

Mobile Vans

Mobile Vans having the company’s logo on it could be used for selling FMCG goods as
well as the company’s products.

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 CHAPTER 3

STAGE OF INNOVATION / CREATIVITY

Testing FMCG innovations: experimental real store versus virtual

In order to cope with the challenge of developing successful fast moving

consumer goods (FMCG) innovations, market research vendors offer several
methodologies to test concepts. The purpose of this article is to examine the
discrepancy between the well-established experimental real store methodology
and the most recent of these alternative methodologies that is the virtual store .
Substantial theoretical and empirical literature indicates inconsistent performance
implications of intrinsic motivation, suggesting the possibility of some explanatory
mechanisms. However, little is known about the factors that might explain intrinsic
motivation and sales force performance relation, particularly in highly competitive and
demanding fast moving consumer goods (FMCG) marketplace requiring new and useful
solutions. Creativity, being a critical yet underutilized weapon in sales force arsenal, has
the potential to assume the role. Therefore, this study aims at developing and testing a
theory-driven framework in linking intrinsic motivation to sales performance while using
sales force creative performance as partial mediator. By employing structural equation
modeling, the empirical validity of the proposed mediating model is evaluated against
plausible moderating model in a sample of 688 frontline field salespersons of FMCG
companies. 

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 FEATURES OF RURAL MARKETING IN INDIA

Marketing according to a leading management theories Peter Drucker can be put in this
way “The aim of marketing is to know and understand the customer so well that the
product or service fits him and sell itself."

We feel that the above quote is the gist of marketing, be it in rural areas or urban areas,
western world or developing world. Marketing in nothing but creating customers and thus
its concepts remain the same. But, due to the differences in the needs, buying behaviour,
values and aspirations of the customers the marketing concepts have to be modified to be
successful. The unique features of rural India which call for special attention and thus,
subsequent changes in the application of marketing concepts are as follows:

a) Traditional Outlook: The rural consumer values old customs and tradition. Basic
cultural values have not yet faded in rural India. Buying decisions are highly influenced
by social customs, traditions and beliefs in the rural markets.

b) Levels of Literacy: -The literacy rate is low in rural areas as compared to urban areas.
This comes in way of the marketer in promoting the product. Advertising is very
expensive making it difficult to communicate with the target audience.

c) Lack of Proper Communication and infrastructure facilities: -Nearly fifty percent

of the villages in the country do not have all weather roads. The Infrastructure Facilities
like roads, warehouses, communication system, financial facilities are inadequate in rural
areas making physical distribution becomes costly.

d) Many Languages and Dialects: -The number of languages and dialects vary widely
from state to state region to region and probably from district to district. Even though the
numbers of recognized languages are only 16, the dialects are estimated to be around 850.

e) Low Per Capita Income: -Even though about 33-35% of gross domestic product is
generated in the rural areas it is shared by 74% of the population. Hence the per capita
incomes are low compared to the urban areas. Normally the rural consumers spent a
majority of their income in basic necessities, which makes them very price sensitive.

The marketing mix in the case of Indian rural markets consists of 4P’s i.e. Product, Price,
Promotion, Place combined with 1 P that is Packaging and one R i.e. Retailer as special
focus areas. However, at the base of this marketing mix will be 2 E’s of Education and
Empowerment.

The traditional marketing hypothesis tends to ignore the requirement of a developing

country’s rural needs. The concept of marketing has to be taken in conjunction with
economic, psychological and social implications. Hence, the concept of Mega-Marketing
where all such factors are taken into consideration while developing the Marketing Mix is
more relevant to succeed and build enduring brands. In rural India’s case the two most
important considerations are Education and Empowerment opportunities which

43 | P a g e
traditional approaches of marketing fail to acknowledge. Then only the opportunity
provided by the rural market can be fully tapped. (SEE APPENDIX 1)

Customization

Retailer

Packaging

Product, Place, Price and Promotion

Education Empowerment

The Marketing Mix for Rural India

1. Product
“Authentic marketing is the art of identifying and understanding customer needs
and creating solutions that deliver satisfaction to the customers, profits to the
producers and benefits for the stakeholders.” ................... Philip Kotler
The product offerings have to be not only customized but also at a different plane
altogether in case of rural markets. The various product levels as outlined by Philips
Kotler, namely Core Benefit, Basic Product, Expected product, augmented product and
Potential Product should be adequately taken into consideration and the product offerings
should be henceforth customized according to the needs.
Potential
Product

Augmented
Product

Expected
Product

Basic
Product

Core
Benefit

44 | P a g e
Most of the times in the urban market the product is offered at the augmented product
level where the objective of the product offering is to exceed the customer expectation.
But in the rural markets of India which have been till date characterized by the absence
of the choice, sub-standard products and cheap clones of their urban counterparts; the
immediate level to be operated is the Expected product where his expectations are met.
Also, due to the low level of incomes and literacy levels, it is imperative that the basic
needs of the consumer are met. For e.g. Today, in India, 70 percent of the shampoo
market is in sachets. Forty percent of rural workers are daily wage earners and have a
daily purchase habit and could do so because of low unit price packs. In real terms
because of these packs, shampoos cost less than 14 years ago. Here the product is
meeting the basic level of need and providing the benefit of convenience and economy
without enthralling or overtly exceeding his expectation.

In case of durable goods the rural customers essentially look for a product that is frill-
free, sturdy and long lasting and in case of consumer goods he looks for products that
operate at the basic level and can provide additional benefits in synchronization with their
habits and lifestyle. For e.g. success of HLL in the soap category indicate the need to new
product development after listening to customer’s needs and not blindly applying the
urban solutions to rural problems. (SEE APPENDIX 2)

2. Promotion: Effective Communication

“If you're trying to persuade people to do something, or buy something, it seems to
me you should use their language, the language in which they think.”-David Ogilvy
Companies cannot rely on conventional advertising techniques in India’s rural areas
where only one in every three households owns a television set and more than half of all
villagers are illiterate. Instead, companies need to turn to more innovative methods of
advertising to reach their potential customer base. Also what appeals to the urban
customer may not appeal to the rural customer due to varying lifestyles. So again, even if
the media reaches him, there might not be an impact as it may fail to attract him as fails
to connect to it due to the lifestyles being different. Few of the available options in the
traditional media are

Puppetry,
Folk Theater & Song,
Wall Painting, ‹ Demonstration, Posters,
Agricultural Games,
NGO’s network

The need for innovative means of communication in rural area can be appreciated by the
case study (SEE APPENDIX 3) where advertisement on hand pumps and ponds helped
in selling more soaps to rural customers.

45 | P a g e
Customization: Combining the above two points we would like to stress the need to
concentrate on both product development and communication in order to win the mind
space of the average rural Indian. Again a concept touted by the marketing gurus
regarding product and promotion strategies in International markets (analogy extendable
to domestic companies moving from urban to rural areas as well) can be used.

Product
Do not change Adapt Develop new
Product Product Product
Do not change Straight Product
Promotion Extension Adaptation
Promotion Product
Adapt Communication Dual Invention
Promotion Adaptation Adaptation

In order to achieve success company should avoid straight extension. Rather some form
of adaptation be it in preferably product or communication or both. In case of deep
pockets, product inventions suited for Indian conditions would be able to generate more
returns rather then a simple copied strategy from abroad or urban markets.

3. Place: Physical Distribution and Channel Management

For most companies wanting to enter the rural markets,
distribution poses a serious problem. Distribution costs and
non availability of retail outlets are major problems faced by
the marketers. The various options in distribution in the rural
markets, which will be out of the ambit proposed traditionally
by the marketing gurus would be:-

a.) Rural Marketing Vehicle (RMV) Marketers need to

make more on-ground contact with their target audience as
well as make demonstration of products as consumers in rural
markets rely on the 'touch and feel' experience. One of the
ways could be using company delivery vans which can serve
both the purposes.

b.) Melas and Haats:-According to the Indian Market

Research Bureau, around 8000 melas are held in rural India
every year and annual sales at melas amount to Rs.3,500
crore. Besides these melas, rural markets have the practice of
fixing specific days in a week as Market Days when exchange
of goods and services are carried out. Also, every region
consisting of several villages is generally served by one
satellite town where people prefer to go to buy their durable

46 | P a g e
commodities. Marketing managers can use these feeder towns
they will easily be able to cover a large section of the rural
population.

The need for innovative distribution techniques to reengineer

the existing distribution processes can be appreciated by
studying the Project streamline as used by HLL in increasing
its reach by adding sub-stockists in its distribution (SEE
APPENDIX 4)

47 | P a g e
4. Pricing the product
A significant portion of the rural population is paid in daily wages. Daily wage earners
tend to have little stock of money, and therefore tend to make purchases only to meet
their daily needs. The implication is that pack sizes and price points are critical to sales,
and importantly, that rural consumers view the purchase-tradeoff dilemma across a much
wider range of product categories. As a result, the nature of competition is much greater;
a beverage manufacturer is not only competing with other manufacturers in its category,
but also other products that consumers may consider one-off luxury purchases such as
shampoo. So marketer will have to examine method by which he can make the product
more affordable. In the case of consumer durable one way is to work through rural bank
and offer higher purchase terms to consumer. In short, the Value for money is the most
important concept that will differentiate the successful brand from the rest.

As explained above in the diagram, a budget seeking consumer in the rural India, takes
into consideration first of all the budget available to him and then warranty and after sales
service before settling on the brand name and model. Thus, the concept of the product
fitting into one’s budget is most important consideration while making a purchase
decision.

5. The 5 the ‘P’ OF MARKETING-i.e. Packaging

The reason for putting packaging out of the product as a special focus area is that due to
low literacy levels the importance of symbols and packaging become more important in
having a high brand recall (SEE APPNDIX 5 for case on Asian Paints). Thus, after the
4 P’s of marketing, it is 5th P which is packaging going to play a key role in rural markets.
Also since the rural customers are usually daily wage earners and they don’t have
monthly incomes like the ones in the urban areas have. So the packaging is in smaller
units and lesser-priced packs that they can afford given their kind of income streams.
(SEE APPENDIX 6 for smaller priced packages).

6. Retailer: The cog in the wheel

Data on rural consumer buying behaviour indicates that the rural retailer influences 35%
of purchase occasions. Therefore, sheer product availability can determine brand choice,
volumes and market share. So, role of retailer is also very important in rural markets,
because he would be one who provides information regarding quantity of pack,
promotional schemes, influences of advertisement, consumer feedback etc to company.
So the retailer plays a very big role here. The rural customer goes to the same shop
always to buy his things. And there is a very strong bonding in terms of trust between the
two. The buying behaviour is also such that the customer doesn't ask for the things by
brand but like --"paanch rupey waali chaye dena". Now it is on the retailer to push
whatever brand he wants to push as they can influence the buyer very easily and very
strongly on the preferences. Hence, there is the need to get his support through proper
trade promotion activities to get more retail shelf and convincing on his side to make the
customer buy the brand.

The Core:
The two biggest problems that the rural India faces are Illiteracy and Unemployment. To
integrate them in one’s Marketing mix ensures that the product or service offered ensures
wider participation and better chances of success. Hence, it gives the rise to the concept
of two E’s: Education and Empowerment at the core of our improved Marketing Mix.
This concept presents an opportunity to improve the life of rural Indians and thus, ensure
that they actively patronize the company’s products.
1.) Education: Since vast majority of rural India lacks even basic education levels
and modern outlook, it is important that the company introducing a new product
should look at building category and not just selling products. It is important to
consistently drive home the point that the customer’s life is going to be enhanced
because of product’s consumption.
 CHAPTER 4

IMPLEMENTATION OF FMCG GOODS

Lean implementation in traditional distributor warehouse - a case study

in an FMCG company.

Warehouse is a crucial part of firms' logistic system and plays an important role in
delivering products from manufacturers to end consumers. Lean principles originated
from manufacturing practice can be adapted to warehouse environment to enhance its
productivity. The study was based on a multinational fast-moving consumer goods in
Indonesia which relied on small and medium enterprises (SME) as their intermediaries to
distribute its products throughout Indonesia. Lean warehousing techniques were used as a
practical tool to introduce a good and efficient warehouse practice for its distributors. As
a standardised framework for its distributors, the company introduced three stages for
lean warehouse implementation, i.e., 'create stability', 'create flow', and 'make flow' in the
warehouse. Implementation was done for the first two stages in one pilot distributor,
resulting to 26% increase in picking productivity and a more balanced warehouse
operation. Result will be used as a baseline and show-case for further implementations to
the rest of its distributors.
 EXECUTIVE SUMMARY

“India’s way is not Europe’s. India is not Calcutta and Bombay. India lives.
in her seven hundred thousand villages.” ....................Mahatma Gandhi, 1926

Marketing in developing countries like India have often been borrowed from the western
world. Concepts like Brand identity, Customer relationship management, 4 P’s of the
marketing mix, Consumer behaviour process; Segmentation, targeting and positioning
etc. have often been lifted straight from the marketing intelligentsia abroad and adopted
in Indian conditions, often with minimal success. Reason lies not in the fault of such
concepts, but their integration with the Indian ethos and culture.

The rural India offers a tremendous market potential. Nearly two-thirds of all middle-
income households in the country are in rural India and represents half of India’s buying
potential. Despite, the strong potential the rural markets are by and large less exploited.
Consider the market, out of five lakh villages in India only one lakh has been tapped so
far. According to us if the rural market must be adequately tapped, there must be a
change in the way marketing concepts learnt in B-schools with adequate adoption
according to scenarios prevalent in rural India. The paper thereby presents the modified
version of Philip Kotler’s famous marketing mix consisting of 4P’s. The focus is on its
modification and subsequent customization to Indian rural market’s perspective. The 4
P’s must be modified to include 1P i.e., Packaging and 1R i.e., Retailer as special focus
areas. Further to ensure the sustainability of the marketing mix two E’s i.e., Education
and Empowerment must be at the core as they help in generating widespread
participation from the rural clientele by enhancing their standard of living.

The Products in the rural market should essentially operate at the basic and expected level
of product classification. They should essentially meet the basic needs of the consumer
and should be a no-frill product, as the consumer would not be valuing much any further
addition to the product concept. Companies also face a daunting task in communicating
about their products to the consumer due to lack of literacy and failure of traditional
media to penetrate in the rural households. Hence, the advertising mix must be more
towards non-conventional yet effective medium like Puppetry, Folk Theatre & Song,
Wall Painting, Demonstration, Posters, Agricultural Games, NGO’s network, etc. Thus,
overall either the product or communication or preferably both need to be customized to
target the rural customer.

In terms of physical distribution due to lack of infrastructure the costs are very exorbitant
to reach the rural customer. Thus, mediums like rural marketing vehicles and melas and
hats provide better opportunities to meet customer needs. Also, the existing distribution
would need a transformation to achieve the required penetration levels as success of
Project Streamline of HLL has shown. Since the value for money concept is more
important rural customers, there must be an approach of treating customer as budget
seeking consumer. Here, fitting the consumer needs into an affordable price point is
pursued first and then other features of product are fitted in. Similarly, packaging has to
 CHAPTER 5

CONCLUSION

Understanding problems today involves thinking from three levels:

 Competition for intellectual leadership for new ideas that create new advantages.
 Competition for translating these ideas into product/service faster than others.
 Competition for market share.
 Do not nature any PARADIGMS because today “anything is possible”
 Search for newer markets than expanding your customer base.
 Come out with state of the art, feature packed affordable and competitive
advantageous products.
 Set Benchmarks for growth.
 Improve up on distribution channels for viable coverage of the market.
 Wear out competition through trend setting, inimitable tactical moves based on our
infrastructure strengths.
 The strategic intent should be clear down the management.
 Work on your strengths i.e. Infrastructure, financial base, backward integration.
 POP and MERCHANDISING material should be mad as per international market.
 CORPORATE TRAINING PROGRAMME for Development of manpower from
external faculty.
 CHAPTER 6

BIBLIOGRAPHY

 David Dee, Dazzle Me , (How To Deliver Uncommonly Good Customer Service

Every Time ).
 John Frazee - Robinson, Customer Driven Marketing.
 Kevin J. Clancy & Robert S. Shulman, Marketing Myths That Are Killing Business.
 Nigel Piercy, Market Lead - Strategic Change.
 Philip Kotler - Gary Armstrong, Principles Of Marketing.
 Richard M.S. Wilson Collin Gillingan, Strategic Marketing
 Management (Marketing Management, Planning, Implementa-Tion) Second Edition,
Britain, Genesis Typesetting - Rochesier- Kent

WEBSITES
 www.censusindia.net
 www.census.gov
 www.indiastat.com
 www.rural.nic.in
 www.indiainfoline.com
 www.yahoo.com
 www.google.com
 www.scholar.google.com
 www.vivisimo.com
 www.clusty.com