4Ps in Rural Markets

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 Product

“ Anything that has a value in exchange”

Product – price – place – promotion
Challenges – Availability, affordability, acceptability
& awareness
Marketing Tools Marketing Challenge
Product Acceptability
Price Affordability

Place Availability

Promotion Awareness

Source: The Rural Marketing Book- Kashyap. P & Raut. S

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 Cont’d

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 Appropriate Product Strategies

Existing & New Products

Product features – service quality – price &
performance relationship
Simplicity is key
“ Sense & Simplicity” – Phillips Global Campaign
 Urban market successes could be rural market
failures
 Appropriate new product development processes

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 Product Levels

CORE BENEFIT

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

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 Cont’d

Product Level Characteristics Example Rural Vs Urban

Core Benefit Fundamental Entertainment Same
benefit/ services
Basic Product Benefit/service Television Set Same
into tangibles
Expected Product Attributes & Digital sound, flat Appearance of
conditions buyers screen differences in
normally expect expectations
Augmented Exceeding Battery Operated Pleasant surprise
Product customer TV for rural customer
expectations
Potential Product Encompassing all Jolly Startek TV Uniquely rural
augmentations & value proposition
transformations

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 Product Development Stages

Stage Marketing Activities

Idea Generation •Searching for new product ideas

Idea Screening •Selectthe most promising ideas and drop those with only limited potential. Study the
needs and wants of potential buyers, the environment and competition.

Concept Testing •Describeor show product concepts and their benefits to potential customers and
determine their responses. Identify and drop poor product concepts. Gather useful
information from product development and its marketing personnel.

Business Analysis •Assessthe product’s potential profitability and suitability for the market-place. Examine
the company’s research, development, and production capabilities. Ascertain the
requirements and availability of funds for development and commercialisation. Project
ROI.

Product Development •Determine technical and economic feasibility to produce the product. Convert the
product idea into a prototype. Develop and test various marketing mix elements.

Test Marketing •Conductmarket testing. Determine target customers’ Reactions. Measure its sales
performance. Identify Weaknesses in product or marketing mix.

Commercialisation •Make necessary cash outlay for production facilities. Produce and market the product in
the target market and effectively communicate its benefits.

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 FMCG Consumption Trends

Products Urban( 1000 HH) Rural ( 1000 HH)

Toilet Soap 998 992
Washing Cake 980 950
Cooking Oil 968 952
Hair Oil/ Cream 897 787
Tea 876 758
Toothpaste 822 449
Washing Powder 819 576
Electric Bulb 723 394
Shampoo 663 352
Biscuits 579 314
Health Beverages 324 67
Source: National Council for Applied Economic Research, 2002
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 Consumption Ranking

Rank Rural Product Urban Product Rural HH

Consumption
grams / month

1 Toilet Soap Toilet Soap 268

2 Washing Powder Biscuits 950

3 Packaged Tea Washing Powder 268

4 Biscuits Packaged Tea 302

5 Detergent Cake Detergent Cake 893

Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail
Consumer Panel, 2001

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 Rural Durable Usage Trends

 NCAER has classified durables into three categories

 Group One( <Rs. 1000)

 Group Two( Rs.1000- 6000)

 Group Three( >6000)

 In group one the growth is as high as 75 percent

 Electrical goods show the highest urban- rural disparity, why ?

 Television( B & W) 195/1000HH in rural Vs 490/1000HH in

urban
 Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban

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 Packaging

Associated with affordability - Convenience -

Consumer recognition & product protection

Packaging material, size, convenience and

aesthetics
 Example: Chik Sampoo

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 Corporate Responses to Fakes

Look-alikes- Spell-alikes & Duplicates

Prices range from MRP to 60 % of MRP

Margins range from 60 % to 300 %

Legal action – awareness programmes – New

Package Development

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 Fakes: Some Examples

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 Cont’d

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 Pricing

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 Issues in Pricing

Internal & external factors

Selecting pricing methods
Pricing adaptations
Low price points – Simple packaging – utility
around packaging material
Highlighting value

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 Price Adaptations ( Indicative)

Product sharing services, Example: Tractors

Product Bundle pricing, Example: HUL Operation
Bharat
Free gifts – may sometimes not work in rural areas
Special event pricing- Hero Honda Rs. 500
campaign

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 Colgate- Cibaca

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 Place- Rural Distribution Challenges

Large number of small markets

Dispersed population and trade

Poor connectivity

Low availability of suitable dealers

Inadequate banking/ credit facilities

Poor product display and visibility

Poor communication of offers and schemes

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 Levels of Distribution

Level Partner Location

1 Company Depot/ C & FA National/ State level

2 Distributor/ Van District level

Operator/ Super Stockist/
Rural Distributor

3 Sub Distributor/ retail Tehsil HQ, towns and

Stockist/ sub stockist/star large villages
seller

4 Wholesaler Feeder towns, large

villages, haats

5 Retailer Villages, haats

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 Distribution Adaption( Indicative)

Hub and Spoke Model, Example: Coca Cola

Use of Affinity groups, Example: Project Shakti
Haat Activation, Example: Colgate
Syndicated distribution, Example: Cavin Care &
Amrutanjan
Use of marketing co-operatives, Example: Warna
Bazaar in Rural Areas
Mobile traders, Example: FMCG companies

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 Promotion- Adaptations for Rural Markets

Conventional Non- Conventional Personalised

Television Haat and Mela Direct mailer

Radio Folk Media( puppet and POS (demonstration, leaflet)

magic show)

Press Video Van Word of mouth

Cinema Mandi Interpersonal

communication

Outdoor: Wall Painting, Animator

Hoarding

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 Melas & Haats
Melas
1. 25,000 melas
2. Companies can concentrate on
the top 100 melas
3. Pushkar Mela in Rajasthan
4. Organised by the state veterinary
department
5. Product sales, promotion,
demonstration and database
generation
6. Cultural activities and rural
sports
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Haat
1. Periodic markets located in larger
villages(> 40,000)
2. 10 – 50 villages are serviced
3. Sunday markets are most popular
4. Average number of outlets is 315 and
average daily sales is about Rs 2 lakhs
5. Traders participate in at least 4 haats
6. 81 percent of the visitors are repeat
customers
 Types of Promotions

Advertising

Sales promotions – coupons, contests, demonstrations

and sampling, Example: Tata Shaktee Haat Hungama

Direct marketing, Example: Videocon

Publicity, Example: Project Shakti and AP Online

Using a direct selling through a sales force, Example:

Swasthya Chetna for Lifebouy

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 Cont’d

Push strategy – sales force and trade promotion

Pull strategy – advertising and consumer

promotion

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 Close of Session

Thank You

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