RURAL INDIA : AN INTRODUCTION

POTENTIAL

74% or almost every 5th Indian lives in rural India

Villages – 6,27,000 58% of total disposable income Market Size – 1,08,000 crores

A 1% increase in rural income increases buying power by almost 10,000 crores

DYNAMICS OF RURAL MARKETS

Need fulfillment/Functional benefits are most sought after because of highly routinized village life.

Low product knowledge and awareness Apply common sense in buying decisions High brand stickiness Influenced by symbols, logos , and colors

buying decisions

Friends, relatives, local ambassadors such as local mechanics play crucial role

Interpersonal communication is best marketing communication tool

Heavily influenced by children/teens – most exposed to TV and modern urban life

TV viewing highest among children and women

DYNAMICS OF RURAL MARKETS CONTD. Lack of homogeneity: perceptions, traditions, values etc. vary vastly from state to state, in some cases region to region.

Focus on value for money rather than low price

Example: No hesitation in buying productivity increasing items such as means of transportation

Rural financing initiatives increase affordability increasing the intention to purchase big items

ACQUIRING KNOWLEDGE OF RURAL CONSUMERS Rural India is very vast and diversified and so the rural people. Hence approach to research should be different for these areas.

Rural people are social so try to engage them in group and than ask them questions.

Try to keep a local persona who is revered highly among that area to facilitate research.

Target HAAT/MELAS to better enquire about product and behavior

Keep a constant touch with retailers.

PROBLEMS OF COMMUNICATION AND SOLUTION

Poor literacy levels leading to lesser product knowledge. Only 41% of Rural population have access to Television. Restricted viewing due to frequents power cuts. Numerous Languages and dialects spoken in India. Remembering advertisements but failing to identify the product. Nearly 6.5 lakh villages in India. Identification of brands through symbols and logos making it easy to deceive villagers.

• Live Demonstrations showing product benefits.(In haats, melas etc.)

• Usage of Transistor Radios for audio advertising.

• Usage of local customized communication packages.

• Advertisements should be functional with minimum dialogue and powerful characterization.

• Target villages with population of above 2000 which have the purchasing power.

• Holograms for ingenuity.

OPPORTUNITIES

Opinion Leaders: a group consisting of progressive farmers, village heads, relatives. They influence the tastes and preferences of villagers in their respective village.

Better brand communication by promoting through dealers and retailers as villagers give high importance to their views.

Mill Marketing: Can be used for marketing of agri products because of the suitable demographic.

OPPORTUNITIES CONTD..

Melas/Haats : Average Sale of INR 2.23 lakh and about 47000 Haats and Melas held every year.

Local Festivals and village campaigns. Eg. Thums Up Chowfulla, ‘Gumbat Gari’.

Tapping the urban aspirations of villagers through aspirational commercials and not treating him as a villager but someone who can be much more. The above should be done without forgetting the notion of ‘value for money’.

PRODUCT PRICING STRATEGY

Product Pricing Strategy

Cinthol, Fair Glow

Introduced in 50 gm pack in the price range of Rs 4-5

Smaller packs to bring the price within the range of rural population.

Rough N Tough Jeans

•Current price rang was Rs 150-300•These jeans were introduced at Rs.195

• Train the local tailors and establish a distribution network in villages with population up to 5000.•Thus, reducing cost and improving distribution.

Philips Free Power Radio

The price was kept under 1000 Rs.

•The system doesn’t need battery and hence cost saving of Rs 1000/Year.•The price was Rs.995

CONTD……

Product Pricing Strategy

Tiger Cream Biscuits

The packs were priced at Rs. 5.

•Consumers in rural areas have aspiration but cannot afford the steep price of Rs. 10-12•Thus, Britannia offered cream biscuits at Rs.5

Agni Sholay Tea Brand by Tata

The price ranged from Rs 31.5- Rs. 6.5

Different packs at different price points were Introduced.Thus a consumer unable to buy a 250 gm pack can buy 50gm at Rs.6.5

Most of the pricing strategy revolves round the fact that rural consumers have low purchasing power and yet aspire to use products out of their reach

By packing the product in different quantities these consumers could afford to buy the product

SUGGESTIONS

In case of Arvind Mill jeans collaboration with local tailor reduced the price but increased the risk of sub standard products

The companies cannot solely be dependent on pricing even in rural areas as the purchasing power will increase and thus, quality and quality of service is important

As price can be matched by competitors it’s important to cater to specific need of the rural consumer rather than just focusing on price

CHALLENGE IN DISTRIBUTION IN RURAL INDIA

Poorly developed transport Infrastructure in rural areas.

Companies faces challenge of Inventory cost Inaccessibility

CRITERIA TO SELECT DISTRIBUTION CHANNEL

• Distribution network model should be appropriate for product and service which is using it.

• Channel should be based on aggregate demand

• Help of rural entrepreneurs should be taken for distribution.

Rural entrepreneur for coke distribution

TYPES OF DISTRIBUTION SYSTEM EFFECTIVE IN RURAL INDIA

Hub and spoke Coca-Cola

Distribution through weekly markets HAATS , Coalgate

Distribution through Feeder towns Durables

Bottling plant to a HUB and from there to local distributor and rural entrepreneur will take forward to the deeper side of villages from there

Hiring local youth which will distribute its product through HAATS and manually by travelling over bike to rural areas

Rural consumer purchases electronic goods from nearest towns.Distribution network should worry about reaching to those stores in town only.

TYPES OF DISTRIBUTION SYSTEM EFFECTIVE IN RURAL INDIA CONTD..By collaborating with companies/NGO/SHG which already are doing great in terms of rural distribution

• P&G did it with Marico for CAMAY

• Samsung did it with E-choupal of ITC

• Hypermart (all brands can collaborate)

• Project Shakti with SHG of Women

A Hyper Mart in Rural India

Project Shakti

PUSH OR PULL!!

Rural distribution incurs a lot of cost on company’s exchequer.

If distribution network is selected and the demand is not anticipated than entire channel may collapse.

So it is strongly recommended to aggregate demand and than plan your distribution channel.

Consumer durables and agri-inputs are supplied on the basis of this only.

Demand from all the spokes are aggregated on hubs and than channel network is decided.