RURAL MARKETING DECISIONS –

PRODUCT & PRICE

z
Unit II
z
SEGMENTATIONz

 Segmentation is the subdivision of the market into homogenous subset of customers

where any subset may conceivably be selected as a target market to be reached with
a distinct marketing mix

 Marketing venturing into rural market may prosper through creatively serving specific
market segment whose needs are imperfectly satisfied by the mass market offering
 z
Heterogeneity in Rural Market

 Socio-cultural differences

 Variation in population size and population density of villages

 Differences in the level of infrastructural development

 Media exposure levels

 Variations in literacy level

 Differences in income level and pattern of income flow

 Family structure
Pre-requisites
z
for Effective Segmentation

 Measurable

 Accessible

 Differentiable

 Substantial
 Homogeneity
 Size
Degrees of Segmentation
z

 Mass Marketing

 Segment Marketing

 Niche Marketing

 Micro Marketing
 Local Marketing

 Individual Marketing
Basis zfor Segmenting Rural Consumer Market

 Geographic Segmentation
 Regions

 Population & Density

 Climate

 Culture
Basis zfor Segmenting Rural Consumer Market

 Demographic Segmentation
 Age and Lifecycle

 Family Structure

 Landownership

 Occupation

 Income

 Socio-economic classification
 Education and Dwelling

 Religion and Class

Basis zfor Segmenting Rural Consumer Market

 Psychographic Segmentation
 Lifestyle

 Behavioral Segmentation
 Occasions

 Benefits sought

 User Status
 1st time user , regular user, ex-user, potential user

 Usage Rate
 Light user, heavy user, medium user

 Loyalty Status

 Place of purchase
Basis zfor Segmenting Rural Consumer Market

 Multi-Attribute Segmentation
Targetingz

 Once segmenting is done, one needs to evaluate each

segment to decide which segment to target.
 Targeting evolves evaluating various segments and selecting
how many and which ones to target.
 Three aspects of targeting are

1) Evaluation of segments

2) Selection of Segment

3) Coverage
Targeting z

1) Evaluation of segments

While evaluation segments, three broad factors are considered

a) Overall attractiveness

b) Company objectives

c) Resource competencies

a) Overall attractiveness: Criteria for measuring the attractiveness are

 Size

 Growth rate

 Accessibility

 Profitability

 Scale economics

 Low risk
Targeting
z

b) Company Objectives: Marketers should evaluate

the segment opportunity with reference to their short
term and long term objectives
c) Resource Competencies: the company should
examine its compatibility with the resources and
capability to service rural markets.
Targeting
z

2. Selection of segments
> Segment can be selected by rating them on a per-
determined scale(low, medium, high) with respect to
the evaluation factor.
> Segment cab be ranked based on the scores
obtained and those with the highest score can be
selected as target segments
Targetingz

3. Coverage of segments
 Organization has three alternative coverage strategies to suit their
segmentation approaches
a. Undifferentiated Marketing

b. Differentiated Marketing

c. Concentrated Marketing

Choosing Coverage Strategy – approach towards strategy selection

changes with reference to the state of four variable i.e
a) Company resources, product variability, PLC and Market variability
Positioning
z

 Positioning is the act of designing the company’s

offering and image to occupy a distinctive place in
the minds of target segment.
 Targeting involves
 Identifying USP
 Selecting difference that have a greater
competitive advantage
 Communicating the same with target audience
Positioningz

Identifying the production concept

 Product differentiation

 Service differentiation

 People differentiation

 Image differentiation

Selecting the positioning concept

 Attractive

 Distinctive

 Pre-emptive

 Affordable

 Communicable
Positioning
z

Developing the concept

 Once the positioning strategy has been selected, the
marketer needs to develop the concept in a effective manner
so that it can be properly addressed to the target market
 Then appropriate media vehicle to reach the target market
effectively has to be selected.
Communicating the concept
 Effective communication is the one that clarifies the Target
market, value proposition, product differentiation
 z

Product Strategy
Product Concept
z

 In rural context, marketers have to use two

framework – the 4 Ps and evaluate it with rural
marketing mix 4 As(Acceptability, Affordability,
Availability and Awareness).
 Product decision is the first decision in the marketing
mix strategy and should be evaluated on the basis of
acceptability parameter to develop the right strategy
for rural markets.
Product Concept
z

 Product is the most vital element in the market

offering. Marketing mix planning begins with
formulating an offering to meet the needs and wants
of the target customer.
 Rural consumer judge the offering on the basis of
three basic elements – product features and quality,
service mix and quality and appropriateness and
pricing
Product Concept
z

 Rural consumers acceptance of the product depends not

only on the need and wants but also on other factors like
the physical and social environments. It also need to
provide value to consumers as well. Rural consumer buy
products based on their attitude and they also carry out cost
benefit analysis of the buying the product.
Product Concept
z

 Factors to be considered when taking product is taken to the rural

market
1)Appropriateness
2) Simple to operate
3) Visually identifiable
4) Affordable
The Levels of a Product
z

Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product
Rural Product Classification
z
Product Decisions and Strategies
z

 Marketers have to make product decisions at three levels

1) Individual product decisions

2) Product line decisions

3) Product Mix decisions

 They also have to strategize at each level of the product

lifecycle.
Product Decisions and Strategies
z

Individual Product Decisions

 This involves decisions related to product attributes,
branding, packaging, labelling and product support
services
 Product attributes such as quality, features, design and
style has to be taken
Product Decisions and Strategies
z

Product Line Decision

 A product line is a group of closely related products priced within a
certain range, targeted at the same customer group and distributed
through the same channel
Product Mix Decision
 A product mix is a set of all product lines and items offered by a
company
Product Decisions and Strategies
z
Product Lifecycle Strategies
Life Cycle Stages
1) Introduction

2) Growth

3) Maturity

4) Decline

Rural Market Stages

5) Developed

6) Developing

7) Under Developed
Product Branding in Rural Markets
z

 The concept of branding has been a late entrant in the

rural market
 In rural market brand association is mainly with colors,
numbers, and visuals and not necessarily with the name
of the brand
 In rural markets, retailers plays a crucial role in brand
promotion. Because of low brand awareness, it is the
retailer who push the brand of their choice.
 First mover brand tends to become the generic brand
Product Branding in Rural Markets
z

Building brands in rural markets

 Building a brand in rural markets involve three steps

1) Developing a brand name

2) Creating brand identity

3) Building brand image

Product Branding in Rural Markets
z

1) Developing a brand name

 Brand name in rural context helps in easy brand recall and

also helps in achieving brand association
2) Creating a brand identity
 Involves the need to relate the brand with the rural life style,
appropriate status symbol and with the rural environment
 Example. Tata Shaktee
Product Branding in Rural Markets
z

3) Building Brand Image

 The brand should have a personality and this should
enable the brand to connect with the rural
consumers.
 It should emote, empathize and talk to the consumers

 Eg. Mahindra Bhoomiputra

Product Branding in Rural Markets
z

 Brand Loyalty Vs Brand Stickiness

 Fake Brands
 Fake Market
 Look alike

 Spell alikes

 Duplicates

 Strategies to counter Fakes

 z
Services – The Concept

 A service is an "(intangible) act or use for which a consumer, firm, or government is willing to pay.“

 Examples include work done by barbers, doctors, lawyers, mechanics, banks, insurance companies,
and so on. Public services are those that society (nation state, fiscal union or region) as a whole pays
for.

 Marketing experts feel that the content of service as much more wider

 “Services can be defined as an action of organization that maintains and improves the well being and
functioning of people”

 According to US Govt Standard Industrial certification, establishment primarily providing a wide variety
of services for individual, businesses and Govt establishments and other organizations, hotels and
other lodging places, establishment providing personal services, repairs and amusement services,
educational institutions, membership organization and other miscellaneous services are included.
 z
Goods Vs Services

Goods and services can be differentiated based on

1) Tangibility

2) Transferability

3) Existence

4) Heterogeneity(hardly standardised)

5) Reselling
 z
Features of Services

 Intangibility

 Perishability

 Inseparability

 Heterogeneity

 Ownership

 Simultaneity

 Quality measurement

 Nature of demand
Services
z Marketing
 The American Marketing Association defines services marketing as an organizational
function and a set of processes for identifying or creating, communicating, and
delivering value to customers and for managing customer relationship in a way that
benefit the organization and stake-holders.

 Services are (usually) intangible economic activities offered by one party to another.
Often time-based, services performed bring about desired results to recipients, objects,
or other assets for which purchasers have responsibility. In exchange for money, time,
and effort, service customers expect value from access to goods, labor, professional
skills, facilities , networks, and systems; but they do not normally take ownership of any
of the physical elements involved.

 The application of marketing principles in services sector is the main thing in the
services marketing.

 Marketing of services is meant for marketing something intangible.

 z

Significance of services marketing

 Creation and expansion of job opportunities

 An optimal utilisation of resources

 Paving avenues for the formation of capital

 Increasing the standard of living

 Environmental friendly technology

 Types of Services
z

 GATS identif i ed 155 activities as services and classif i ed them into 11 categories. These 11 types of
services are

 Business services
 Communication
 Construction and engineering
 Distribution
 Environment
 Finance
 Tourism
 Health
 Recreation
 Transportation
 z
Pricing in Rural India
 Price is a major element in marketing mix

 It is defined as the exchange value of a product or service; and is the amount needed
to acquire a product or services

 It is the only element in marketing mix that generate revenue

 Right price to the product/services influences the consumer to buy more quantity.

 Affordability is a major factors while purchasing any product.

 Now there is a shift from farm to non farm based products.

 Purchasing power is increasing resulting in the growth of the rural market

 Today, price is not the only consideration in the purchase of the product.
 z
How do companies price

 It is very important to decide how much to charge for a product

 If charged too much, the product will not sell. If it is priced too less, the company will
not earn significant revenue

 Consumer look for value for money. Companies has to price their product to meet
consumer expectation and generate profits.

 Companies also use Target pricing for rural segment. It is a concept used throughout
the PLC, but is primarily used and is most effective at the product development and
design stage.
 z
Consumer Psychology and Pricing

 Marketer should understand the consumer psychology before setting the prices of
their offering.

1) They are very conscious of value for money. They do not look for cheap product;
instead they look for value for money

2) They donot value premium product. They buy product with basic features

3) They compare the product price to a reference price.

 z
Setting the price for rural product and price
Internal Factors

1) Cost
1) Promotion cost

2) Distribution cost

2) Pricing objective of the company

1) Profit Maximization in the long run

2) Minimum returns on the sales turnover

3) Deeper penetration of the market

4) Keeping up with the competition

5) Increasing sales volume and market share

 z
Setting the price for rural product and price

External Factors

1) Price sensitivity of consumer

2) Channel cost

3) Competition

4) Environment
Price setting strategy
z
Market Entry Strategy

1) Skimming Pricing

2) Penetration Pricing

Product Mix Pricing Strategy

3) Optional product Pricing

4) Captive product pricing

5) Product bundle pricing

Price Adjustment strategy

6) Discount and allowance pricing

7) Freebies

8) Special event pricing

9) Economy pricing

10) Value pricing

11) Psychological pricing

12) Discriminatory pricing

Price setting strategy
z

Rural Specific Pricing Strategy

1) Low Price points

2) Low cost packaging

3) Refillable / reusable packs

4) Highlight value, not price

5) Coinage Pricing

6) Product sharing services