Rural Markets

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

Cont’d
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
 Product Levels

CORE BENEFIT

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT
 Cont’d
Product Level Characteristics Example Rural Vs Urban
Core Benefit Fundamental Entertainment Same
benefit/ services
Basic Product Benefit/service into Television Set Same
tangibles
Expected Product Attributes & Digital sound, flat Appearance of
conditions buyers screen differences in
normally expect expectations
Augmented Product Exceeding customer Battery Operated TV Pleasant surprise for
expectations rural customer
Potential Product Encompassing all Jolly Startek TV Uniquely rural value
augmentations & proposition
transformations
 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 •Describe or 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.
 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
 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
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

Packaging
Associated with affordability - Convenience -
Consumer recognition & product protection

Packaging material, size, convenience and

aesthetics

 Example: Chik Sampoo

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
Fakes: Some Examples
Cont’d
Pricing
Issues in Pricing
Internal & external factors
Selecting pricing methods
Pricing adaptations
Low price points – Simple packaging – utility around packaging material
Highlighting value
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
Colgate- Cibaca
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

Levels of Distribution
Level Partner Location

1 Company Depot/ C & FA National/ State level

2 Distributor/ Van Operator/ District level

Super Stockist/ Rural
Distributor

3 Sub Distributor/ retail Tehsil HQ, towns and large

Stockist/ sub stockist/star villages
seller

4 Wholesaler Feeder towns, large villages,

haats

5 Retailer Villages, haats

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
 Promotion- Adaptations for
Rural Markets
Conventional Non- Conventional Personalised

Television Haat and Mela Direct mailer

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

show)

Press Video Van Word of mouth

Cinema Mandi Interpersonal communication

Outdoor: Wall Painting, Animator

Hoarding
 Melas & Haats
Melas Haat

1. 25,000 melas 1. Periodic markets located in larger

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
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
Cont’d
Push strategy – sales force and trade promotion

Pull strategy – advertising and consumer

promotion