rural marketing

1 | M a k i n g I n r o a d s I n t o H i n t e r l a n d

MANAGEMENT RESEARCH PROJECT

REPORT

On

“Making Inroads into Hinterland (Rural Marketing)”

By

Shobit Gupta


MANAGEMENT RESEARCH PROJECT

REPORT

On

“Making Inroads into Hinterland (Rural Marketing)”

SUBMITTED TO: SUBMITTED BY:

Prof. Pooja Arora Shobit Gupta

IBS-Chandigarh 08BS0003166


A report submitted to Prof. Pooja Arora in partial fulfillment of requirements of MBA program

ACKNOWLEDGEMENTS

It gives me great satisfaction on completion of Management Research Project entitled “Making

Inroads into Hinterland (Rural Marketing)”

On the submission of my project report I would like to express my sincere gratitude to my guide

Prof. Pooja Arora (ICFAI Business School, Chandigarh) for mentoring me and taking active

interest throughout the project.

I am again deeply indebted to Prof. Pooja Arora for sharing his insights on the topics and for

being a constant source of inspiration & courage during the entire project work. She was always

available, correcting mistakes, intelligently directing me to proper sources of information

advising to aim for simplicity, brevity, clarity and accuracy. I am indeed thankful to her for his

valuable guidance.

I would like to thank entire faculty members for sharing their immense experience and

extending their support in carrying out this project work. I am greatly acknowledged for their

kind help.


Table of Contents 1. ABSTRACT ................................................................................................................................................. 7

2. INTRODUCTION ......................................................................................................................................... 8

3. OBJECTIVE OF THE PROJECT.................................................................................................................... 10

5. METHODOLOGY ...................................................................................................................................... 11

a) Research Design .............................................................................................................................. 11

b) Method of data Collection ................................................................................................................ 11

6. RURAL MARKETING ................................................................................................................................ 11

6.1 RURAL MARKETING ........................................................................................................................... 11

6.2 DIAGNOSIS OF THE FAILURES ...................................................................................................... 13

6.3 ATTRACTIVENESS OF RURAL MARKET ............................................................................................ 16

6.4 RURAL V/s URBAN MARKETING ........................................................................................................ 19

6.5 DIFFERENCES IN URBAN-RURAL MARKET RESEARCH ....................................................................... 20

6.6 SELECTING & ATTRACTING NEW MARKETS ...................................................................................... 21

6.7 PRICING ............................................................................................................................................. 22

Pricing Frame-Work ............................................................................................................................ 23

Cost-based Methods ........................................................................................................................... 24

Competition – Based Pricing Methods ............................................................................................... 24

Demand-based pricing Methods......................................................................................................... 25

Price in Marketing Mix ........................................................................................................................ 26

Skimming Vs Penetration Strategies ................................................................................................... 26

7. PROMOTIONAL STRATEGY ..................................................................................................................... 27

EXPLORING MEDIA .............................................................................................................................. 27

DESIGNING RIGHT PROMOTION STRATEGY ....................................................................................... 28

7.1 DESIGNING PROMOTION .................................................................................................................. 29

(a) Communication objectives: ............................................................................................................... 29

(b) Message content: .............................................................................................................................. 30

(c) Message structure ............................................................................................................................. 30

(d) Message format: ................................................................................................................................ 31

(e) Message source: ................................................................................................................................ 31

(f) Selecting the Channels: ...................................................................................................................... 32


Personal Channels ............................................................................................................................... 32

Distribute products for interaction ..................................................................................................... 33

Create Opinion leaders ....................................................................................................................... 33

Advertising with interactivity .............................................................................................................. 34

Train middlemen ................................................................................................................................. 34

Tele links for online transaction .......................................................................................................... 35

Non-Persona, Channels ....................................................................................................................... 35

(g) Deciding on Promotion Mix ............................................................................................................... 36

(i) Contests and Demonstrations: ....................................................................................................... 36

(ii) Sampling: ....................................................................................................................................... 36

(iii) Installment Schemes: .................................................................................................................... 37

7.3 DISTRIBUTION STRATEGY .................................................................................................................. 38

7.4 THE OLD SETUP ................................................................................................................................. 39

1. Wholesalers: ................................................................................................................................... 39

2. Retailers ......................................................................................................................................... 39

3. Vans ................................................................................................................................................ 41

4. Weekly Haats & Bazaars ................................................................................................................. 41

5. Melas and Fairs .............................................................................................................................. 42

7.5 THE NEW PLAYERS ............................................................................................................................ 43

1. Unofficial Channels......................................................................................................................... 43

2. Cooperative Society ....................................................................................................................... 43

3. Public Distribution System (PDS).................................................................................................... 44

4. Petrol Pumps .................................................................................................................................. 44

5. Agricultural Input Dealers .............................................................................................................. 44

6. NGOs .............................................................................................................................................. 44

7. Barefoot Salesmen ......................................................................................................................... 45

8. Syndicated Distribution .................................................................................................................. 45

7.6 NEW APPROACHES ............................................................................................................................ 46

1. Distribution Trends ........................................................................................................................ 46

2. Direct To Home Selling ................................................................................................................... 46

3. Relationship Marketing .................................................................................................................. 47


8. PRODUCT STRATEGY ............................................................................................................................... 49

(i) Based on Tangibility ............................................................................................................................ 49

(ii) Based on the purpose of use ............................................................................................................. 49

(iii) Based on the functional life of the product ............................................................................................ 49

(iv) Based on habits ................................................................................................................................. 50

(v) Based on the price and quality .......................................................................................................... 50

(vi) Based on product development ....................................................................................................... 51

(vii) Based on brand hierarchy level........................................................................................................ 51

8.1 CONCEPT AND SIGNIFICANCE OF PRODUCT STRATEGY ................................................................... 52

(i) Achieves Product – Market Fit: - .................................................................................................... 52

(ii) Encourages Innovativeness: - ........................................................................................................ 52

(iii) Provides Competitive Edge: - ........................................................................................................ 52

(iv) Makes Better Use Of Resources: - ................................................................................................ 52

1. Length of product line: -...................................................................................................................... 54

2. Line Pruning: - ..................................................................................................................................... 55

3. Line Modernization: - .......................................................................................................................... 55

CASE STUDIES .............................................................................................................................................. 57

COCA – COLA INDIA ................................................................................................................................ 57

TATA SALT ............................................................................................................................................... 59

COLGATE ................................................................................................................................................. 62

CASPER .................................................................................................................................................... 64

9. CONCLUSION ........................................................................................................................................... 67

10. REFERENCES ......................................................................................................................................... 69


1. ABSTRACT

Rural Markets have seen a big boom in terms of opportunities they provide to the corporate

sector in India. Rural India had a share of over 55 per cent in total consumption of FMCGs (Fast

Moving Consumer Goods), and had a growth of about 14 per cent per annum during the

period 1992-93 to 1997-98. This seems to be a fairly good growth by any standard. The rural

market’s contribution to the total national market had gone up from 28 per cent in 1985 to 40

per cent in 1990. The size of rural market in 1992 was of the order of Rs. 40,000 crores, made-

up of Rs. 22,000 crores for non-food items and Rs. 18,000 crores for food items. During the

period 1992-93 to 1997-98 consumption of FMCGs had grown at a rate of 14 per cent per

annum.

According to data furnished by National Council for Applied Economic Research (NCAER) clearly

showed a great rural market boom. The Chief Economist of NCAER (based on this data)

clarified “that rural growth rates have already outpaced urban ones and will continue to do so

through the next decade. So, a presence in the rural market will not remain a choice, but a

necessity”. The companies will have no choice but to go rural if they must survive. Findings of

the study conducted by NCAER in1998-99 showed that, (i) Rural markets for group I durables

(less than Rs. 1000 in value: items like transistors, pressure cookers, wrist-watches, bicycles,

etc.) are bigger than urban markets already; predicted that (ii) rural markets for group II

durables (Rs. 1001- Rs. 6000 in value: items like B&W TVs, sewing machines, mixers, cassette

recorders) will be bigger than urban markets by 2001-02; (iii) for group III durables (Rs. 6001

or more in value: like color TVs, refrigerators two-wheelers and washing machines) rural

markets will be smaller than urban ones, even in 2006-07; and showed that (iv) rural market

growth rates are faster than urban ones, even on the larger bases of group I & II. The NCAER

data also showed that India is now seeing a dramatic shift towards prosperity in rural

households. It predicted that the lowest income class will shrink from more than 60%

in1994-95 to 20% in 2006-07. The higher income classes will be more than double. Rural

economy has triggered. Ten good rains in a row from 1980-81 to have 1998-99) boosted food

grain production. Procurement prices have also been rising. This implies growing rural

prosperity and demand for goods. The NCAER data clearly showed that Rural FMCG (Fast


Moving Consumer Goods) market will boom.

Some impressive facts about rural sector:

I. The number of rural supermarkets (haats) in India 42,000 exceeds the total number of

retail chain stores in the US (35,000).

II. In 2001-02, LIC sold 55 percent of its policies in rural India.

III. Of the two million BSNL mobile phone connections, 50 per cent are in rural

IV. Of the 20 million who have signed up for Rediffmail, 60 per cent are from small towns.

Of the one lakh who have transacted on Rediff online shopping site, 50 per cent are from

small towns.

V. 24 million Kisan Credit Cards (KCC) issued in rural areas exceeds the 17.7 million credit

plus debit cards issued in urban India. A whopping Rs. 52,000 crore has been sanctioned

under the KCC scheme.

VI. The number of middle and higher income families (Having Rs. 70,000 plus annual

income) in rural (21.7 million) and urban (24.2 million) is nearly the same.

2. INTRODUCTION

The footfalls in the villages are getting louder and louder as companies scramble to woo the

rural consumers. Villages are no longer an abstraction, but fashionable in marketing terms.

From talking endlessly about potential growth, companies are now actively cultivating the rural

markets. And why not?

Consider the market; out of five lakh villages in India only one lakh have been tapped so far.

What has made the rural consumers so attractive to companies now? After all, the 122-million

village households were not created overnight.

The answer is simple. The urban market is getting saturated while villagers are flush with

'disposable income' thanks to bountiful harvests in the last four years. It is this income that the

companies are raring to cash in on. The estimate speaks of the potential volume of business

that can be generated in rural Indian markets. The estimate is about three times that of the

European market.


Hindustan Lever's 'Operation Bharat' will reach 22 million new households in the villages

by the end of the year.

Every area that has a police station will soon boast a Godrej dealer & service center.

BPL is planning to add 13,000 active dealers this year to its existing network of 15,000

throughout the country.

A dramatic change is in progress. Villagers who used to crack open peanut 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

laganaa, 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. Yet there has not been substantial progress in this area.

It can be seen that now 73% of India’s total population is rural. Though over the last decade,

there has been a marginal reduction in the rural population expressed as a percentage of total

population, there has been a steady growth in rural population in terms of absolute numbers.

And, it had reached 74 crore by 2001. In terms of households, the rural market consists of more

than 12 crore households, forming over 70 per cent of the total households in the country.

Urban population in India is concentrated in 3200 cities and towns whereas the rural

population is scattered across 630,000 villages. Even the FMCG giant, HLL, directly reaches only

70,000 villages of the country. This goes to prove that the rural market is scattered over a large

area and is very difficult to penetrate.


Nearly 60 % of the rural income comes from agriculture. Hence rural prosperity and disposable

income with rural consumers is linked largely with agriculture. 50 % of the households in the

rural economy are in the income category of less than Rs. 25000 per annum, but about 14% of

the households have an annual income that exceeds Rs. 50,000.

The rate of growth of the rural market segment is however not the only factor that has driven

marketing managers to go rural. The other compelling factor is the fact that the urban markets

are becoming increasingly complex, competitive and saturated.

The policies of the government largely favor rural development programs. This is clearly

highlighted by the fact that the outlay for rural development has risen from Rs 14000 crore in

the 7th plan to Rs 30000 crore in the 8th plan period. In addition, better procurement prices

fixed for the various crops and better yields due to many research programs have also

contributed to the strengthening of the rural markets. This attraction towards the rural markets

is primarily due to the enormous variation in the demands of approximately 740 million rural

people. Thus, with the rural markets bulging in both size and volume, any marketing manager

will be missing a great potential opportunity if he does not go rural.

'Rural markets are future battlegrounds'

3. OBJECTIVE OF THE PROJECT

"Any task without sound objectives is like Tree without roots". Similarly in case of any research

study undertaken, initially the objectives of the same are determined and accordingly the

further steps are taken on.

A research study may have many objectives but all these objectives revolve around one major

objective which is the focus of the study.

In this study, the focus is on the emergence of rural markets as the most happening market on

which every marketer has an eye. And so this study will be based on studying the emergence of

rural market in various contexts. The following are the objectives of this research study:-


To study the emergence of rural markets in the context of India.

To study the present scenario of rural marketing in India.

To study the role of advertisement in rural India.

To study the constraints in marketing communication in rural India.

To study the future prospects of rural markets.

To study the challenges faced by rural marketers in India.

To study the reasons of popularity of rural markets in India.

5. METHODOLOGY

a) Research Design: On the basis of fundamental objectives of research, our study is a type of

Descriptive Research: Descriptive research, also known as statistical research, describes data

and characteristics about the population or phenomenon being studied. Descriptive research

answers the questions who, what, where, when and how.

Although the data description is factual, accurate and systematic, the research cannot describe

what caused a situation. Thus, descriptive research cannot be used to create a causal

relationship, where one variable affects another. The objective of my research is to describe

things such as the market potential for a product or the demographics and attitude of rural

consumer who buy the product.

b) Method of data Collection

Secondary Data: Large amount of secondary data is available in the forms of articles, manuals

and previously conducted researches on the similar topic. Also, the data thus gathered will

help in identifying key parameters to examine through further exploration and thus will help in

defining the objectives.

6. RURAL MARKETING

6.1 RURAL MARKETING

Quite clearly, large Indian companies have begun looking at rural markets seriously. Some of

them are even developing exclusive marketing strategies to tap this huge mass of consumers.


Of India's one billion plus population, nearly 70 per cent live in non-urban or rural areas.

According to a National Council for Applied Economic Research (NCAER) study, there are as

many "middle income and above" households in rural areas as there are in urban areas. There

are almost twice as many "lower middle income" households in rural areas as in urban.

According to NCAER's projections, the number of middle and high-income households in rural

India is expected to grow from 80 million to 111 million by 2007. In Urban India, the same is

expected to grow from 46 million to 59 million. Hence the absolute size of middle and high

income households in Rural India is expected to be nearly double that of Urban India.

Percentage Distribution of household, population and income

HOUSEHOLDS POPULATION INCOME

RURAL 73.6 74.6 55.6 URBAN 27.4 25.4 44.4 ALL INDIA 100 100 100

Thus we see that Rural India contributes almost 56% to the National Income as against 44%

contributed by Urban India. Although it is contributed by 75% of the total population, which has

its own challenges like how to sell small quantities to large base of consumers.

Percentage Of Population Below Poverty Line By Rural-Urban Location State Wise (1999-2000)

STATES RURAL URBAN

ALL-INDIA 36.35 28.76

ANDHRA PRADESH 25.48 32.28

ASSAM 61.78 12.48

BIHAR 58.85 45.10

GUJARAT 26.22 21.70

HARYANA 14.86 13.79

KARNATAKA 38.50 24.55

KERALA 26.50 31.89

MADHYA PRADESH 39.35 46.29

MAHARASTRA 50.00 32.16

ORISSA 62.67 34.27


PUNJAB 14.24 6.74

RAJASTHAN 15.01 24.36

TAMIL NADU 39.37 29.82

UTTAR PRADESH 29.87 36.39

WEST BENGAL 55.16 16.74

Thus the Situation has further worsened as per the Report on Human Development Index.

6.2 DIAGNOSIS OF THE FAILURES

The apparent disparity requires introspection to identify the gaps, which can then be

bridged between rural & urban India.

a) Relative share (%) against GDP

Sector 1950-51

1995-96

Agriculture 56 29 Manufacturing 15 29 Transport & Trade 11 20 Banking 9 11 Administration (Services) 9 11

Growth rates in different sectors of economy

Particulars 1990-91

91-92

92-93

94-95

Growth In Real GDP % 5.2 1.1 4.3 4.3 Growth In Agriculture Production % 3.0 -1.9 2.9 2.9 Growth In Industrial Production % 8.3 0.6 2.3 4.1

b) Subsistence Orientation of Agriculture

I. Productivity is low

II. Land degradation

c) Failure of Land Reforms

I. Failure of redistribution of land in favor of poor.

II. Large numbers of workers dependent on agriculture leading to low labor

productivity.


III. Splitting of families and rise in population has shrunk the size of operational land

holding.

IV. Landlessness is increasing forcing more and more people joining labor market

every year.

d) Inadequate Food Supplies

I. At national level India is self-sufficient but inadequate at the household level.

II. Increase in food production mainly due to few crops like wheat & rice but

production of bajra, barley etc has declined considerably (as these are the corps

used by poor in rural India).

e) Slow Gr ow th of Infrastructure

I. Still 40% of India’s villages are without proper roads.

II. 1.8 Lac villages do not have primary schools within 1 km.

III. 4.5 Lac villages have drinking water problem.

f) Inadequate Inputs

I. Research extension systems are weak, no direct link between scientists and

farmers.

II. Problems faced in the timely availability of improved seeds, fertilizers and

pesticides in required quantity.

III. Credit is major constraint, which adversely affects adoption of new technologies

especially by the small farmers.

g) Slow Down Of Rural Industrialization

The rural industrialization has slowed down although the expenditure on rural industries

increased from Rs.42/- crores (1st plan) to Rs.6334/- crores (8th plan). However %age of

allocation decreased from 2.1% to 1.6%.

Plan outlay on rural industrialization (Rs. Crore)

PLAN

PUBLIC SECTOR

OUTLAY

RURAL

INDUSTRY

%


I 1960 42 2.1

II 4672 187 4.0

III 8577 241 2.8

IV 15779 293 1.9

V 39426 592 1.5

VI 97500 1780 1.8

VII 180000 2753 1.5

VIII 434100 6334 1.6

Rural Marketing: A silent revolution is sweeping the Indian countryside. It has compelled

marketing whizkids to go rural. The marketing battlefield has shifted from the cities to the

villages. “Go Rural” seems to be the latest slogan.

Adi Godrej of Godrej soaps says:

“The rural consumer is discerning and the rural market is vibrant. At the current rate of growth

it will soon outstrip the urban market. The rural market is not sleeping any longer.”

C. K. Prahlad, the management guru observes:

“Selling to the poor may be more profitable than selling to you and me. This is where the

future is. Opportunities are everywhere. The digital divide is not about lack of opportunity, it

is about the lack of imagination.”

Evolution of Rural Marketing

PHASE

ORIGIN

FUNCTION

MAJOR

PRODUCTS

SOURCE

MARKET

DESTINATION

MARKET

I Before

Mid-1960

Agricultural

Marketing

Agricultural

Produce Rural Urban

II Mid-

Sixties

Marketing Of

Agricultural

Inputs

Agricultural

Inputs Urban Rural

III Mid-

Nineties

Rural

Marketing

Consumables And

Durables For

Consumption

& Production

Urban

Rural Rural


6.3 ATTRACTIVENESS OF RURAL MARKET

1) Large population

2) Rising propensity

3) Growth in consumption

4) Life cycle changes

5) Life cycle advantages

6) Market growth rate higher than urban

7) Rural marketing is not expensive

8) Remoteness is no longer a problem

1. Large Population: The rural population is large and its growth rate is also high. Despite

the rural urban migration, the rural areas continue to be the place of living majority of

Indians.

2. Rising Rural Propensity:

Income Group 1994-95 2000-01 2006-07

Above Rs. 100,000 1.6% 3.8% 5.6%

Rs. 77,001-100,000 2.7% 4.7% 5.8%

Rs. 50,001-77,000 8.3% 13.0% 22.4%

Rs. 25,001-50,000 26.0% 41.1% 44.6%

Rs.25,000 & Below 61.4% 37.4% 20.2%

3. Growth in consumption:

Per Capita Household Expenditure (Rs.)

Level No. States Expenditure

High

(Above Rs 382/-)

7

Punjab 614

Kerala 604

Haryana 546

Rajasthan 452


Gujarat 416

Andhra Pradesh 386

Maharashtra 384

Average

(Rs. 382/-)

5

West Bengal 382

Orissa 381

Tamil Naidu 381

Uttar Pradesh 373

Karnataka 365

Low

(Below Rs. 382/-)

3

Assam 338

Madhya Pradesh 326

Bihar 289

4. Life style changes:

Income vs. usage of packed consumer goods (% of household using)

Goods

Monthly Household Income (Rs.)

Up to 350 351 –750

751 –1500 1501 +

Washing Bars 60 78 86 91

Toilet Soaps 57 72 89 93

Tooth Paste/Powder 22 36 65 85

Talcum Powder 20 25 41 63

Tea Packaged 22 30 48 64

This shows how consumption is increasing with increase in income level.


5. Life cycle Advantage:

Stages in Life Cycle

Product Urban Market Growth Rate % Rural

Popular soaps Maturity 2 Growth

Premium soaps Late growth 11 Early

growth Washing powder Late growth 6 Early

growth Skin creams Maturity 1.1 Growth

Talcum powder Maturity 4 Growth

6. Market growth rates higher: Growth rates of the FMCG market and the durable market

are higher in rural areas for many products. The rural market share will be more than 50%

for the products like toilet soaps, body talcum powder, cooking medium (oil), cooking

medium (vanaspati), tea, cigarettes and hair oil.

7. Rural marketing is not expensive: Conventional wisdom dictates that since rural

consumers are dispersed, reaching them is costly. However, new research indicates

that the selling in Rural India is not expensive. According to one research it costs roughly

Rs.1 Crore to promote a consumer durable inside a state. This includes the expenses of

advertising in vernacular newspapers, television spots, in- cinema advertising, radio, van

operations and merchandising and point of purchase promotion. Campaign like this,

which can reach millions, costs twice as much in urban area.

8. Remoteness is no longer a problem: Remoteness in a problem but not

insurmountable. The rural distribution is not much developed for the reasons,

Lack of proper infrastructure such as all-weather roads, electrification and

sanitation, and

Lack of marketer’s imagination and initiative.

Marketers have so far, failed in analyzing the rural side and exploiting rural India’s

traditional selling system- Haats & Melas. Their near obsession with just duplicating the

urban-type network and that too with very limited success, has kept them blind to the

potential of these two outlets.


6.4 RURAL V/s URBAN MARKETING

NO. ASPECT URBAN RURAL

1

PHILOSOPHY

Marketing & Societal

Concepts & Relationship

Marketing

Marketing & Societal Concepts,

Development Marketing &

Relationship Marketing

2

MARKET

DEMAND High Low

COMPETITION Among Units In

Organized Sector

Mostly From

Unorganized Units LOCATION Concentrated Widely Spread

LITERACY High Low

INCOME High Low

EXPENDITURE Planned, Even Seasonal, Variation

NEEDS High Level Low Level

INNOVATION/ADOPTION Faster Slow

3

PRODUCT

AWARENESS High Low

CONCEPT Known Less Known

POSITIONING Easy Difficult

USAGE METHOD Easily Grasped Difficult To Grasp

QUALITY PREFERENCE Good Moderate

4 PRICE

SENSITIVE Yes Very much

LEVEL DESIRED Medium-high Medium-low

5

DISTRIBUTION

CHANNELS

Wholesalers, stockists,

retailer, supermarket,

specialty stores, &

authorised showrooms

Village shops,

“Haats”

TRANSPORT FACILITIES Good Average

PRODUCT AVAILABILITY High Limited

6

PROMOTION

ADVERTISING

Print, audio visual media,

outdoors, exhibitions etc.

few languages

TV, radio, print media to some

extent. More languages

PERSONAL SELLING

Door-to-door, frequently Occasionally

SALES PROMOTION

Contests, gifts, price

discount

Gifts, price discounts

PUBLICITY Good opportunities Less opportunities


6.5 DIFFERENCES IN URBAN-RURAL MARKET RESEARCH

ASPECT URBAN RURAL

RESPONDENTS

Literate, brand aware,

individual respond

individually

Semiliterate or illiterate, brand unaware,

difficult to get individual responses,

generally group responses

TIME

Willing to respond, have time pressures, spares little time for

researcher

Hesitant but devotes time.

ACCESSIBILITY Easy to access, though many

suffer from research fatigue

Tough to access: Geographical

distances and psychological apprehension are barriers

Do not speak to outsiders easily

SECONDARY DATA

SOURCE

Internal data, syndicate

research, published media, many sources and large data

Very few sources and less data

PRIMARY DATA

SOURCES

Large number of middlemen,

experts, sales force,

consumers opinion leaders

Less number of all categories

SAMPLING

Respondents form relatively homogenous group. Income

can be a criterion

Heterogeneous groups. Income and

land holding be carefully applied

DATA COLLECTION

Use of sophisticated

instruments, style and admiration.

Respondents comfortable with numbers ratings.

Requires simplified instruments.

Respondents comfortable with colors

& pictures.


6.6 SELECTING & ATTRACTING NEW MARKETS

Selecting and attracting markets involves three decisions viz., segmenting, targeting

and positioning.

I. Segmentation is the process of dividing or categorizing market into different

groups based on one or more variables.

II. Targeting is selecting the market segment, which can be served efficiently and

profitably. It is deciding on market coverage strategy.

III. Positioning is a market attraction strategy, which involves placing the brand in

the minds of the customers in the target market.

The various steps included in the market coverage and attraction process are:

DECISION ACTIONS

SEGMENTATION Identification of various bases for segmenting the market.

Developing profiles of the marketing segments.

TARGETING Evaluating the market segment for their attractiveness.

Deciding the market coverage strategy

POSITIONING Identifying a set of possible competitive advantages of the brand

Selecting the right competitive advantage

Communicating the chosen competitive advantage to the target customers

Segmentation is the process of identifying & establishing alternative market

segments. Next step that is targeting involves is evaluation, selection & coverage.

Evaluation of segments (following criteria may be applied):

A. Profitability - relevant information required is:

a. Sales volume

b. Distribution cost

c. Promotion cost

d. Sales revenue

e. Profit margins

B. Attractiveness

C. Growth rate

D. Company objectives


Selection of segments

Coverage of segments

Segmentation Type Of Marketing Coverage Strategy

Zero Mass Undifferentiated

Substantial Segmented Differentiated

Selective Niche Concentrated

Choosing a Coverage Strategy

VARIABLE STRATEGY

UNDIFFERENTIATED DIFFERENTIATED CONCENTRATED

RESOURCES Moderate Large Limited

PRODUCT VARIABILITY Less More Less

PRODUCT LIFE CYCLE STAGE Introduction Growth Introduction

MARKET VIABILITY Less High High

Positioning

Positioning is the act of finding a place in the minds of consumers and locating a brand therein.

Positioning involves:

I. Identifying the difference of the offer vis-à-vis competitor’s offer.

II. Selecting the differences that have greater competitive advantage.

III. Communicating such advantages effectively to the target audience.

6.7 PRICING

Among the four A’s of rural marketing viz. Affordability Availability Awareness Acceptabilit

Affordability is the major determinant of consumption.

Affordability is determined by two factors

o Incomes of the consumer o Prices of the products or services


Pricing Frame-Work

S.No. Situation Major Factors Approach Method

1 New Product introduction Demand -Elastic

-Inelastic

Cost-oriented Demand-oriented

Cost-plus or mark-

up, Penetration, Skimming

2 Product-life cycle (short) Cost Demand

Competition

Cost-oriented Payback/capital

recovery, Rate of return

3 Growing markets Cost Cost-oriented Cost plus, mark-up Experience curve

4 Mature markets Stiff competition

Competition Competition-

oriented

Leader pricing,

Competitive pricing

(bidding), Going rate pricing

5 Growing/mature markets.

Discerning buyers

Demand Demand-oriented Discriminatory,

Differential, Perceived value,

Psychological, Value pricing

6 Product-mix promotion Demand Cost

Competition Image

Demand-oriented Product-line,

Optional feature, Captive product,

Two-part, Product bundling

7 Distribution to scattered Customers

Geographical Cost

Cost-oriented Geographical

pricing

8 Motivating channel Competition

Channel members

Competition-

oriented

Discount pricing

Approaches to pricing would be based on one or more of the following bases:

1 Cost 2 Competition 3 Demand

Various methods of pricing are discussed in the following tables:


Cost-based Methods

Method Description

Cost-plus or Mark-up All associated costs of production are

computed. Prices are fixed by making up a fixed percentage over average or marginal costs.

Marginal cost or Contribution Price is determined to recover marginal cost

and make a contribution to the firm.

Target return Prices are set in anticipation of earning a

desired target return on investment.

Pay back method (capital recovery) Price is determined to enable the firm to Cover all costs and capital investment within a specific time period.

Experience curve An experience curve represents the relationship

between costs and cumulative experience. With learning, costs decline and allow fixation of

lower prices.

Competition – Based Pricing Methods

Method Description

Leader pricing Some product items may be priced low, to

attract customers and to generate more overall demand for other items.

Competitive pricing It matches the market prices of competitors. It is

reactive.

Going rate pricing (Follow the crowd/leader) Firm prices its products at the same level or

below the prices of leading competitors.

Sealed bid pricing In industrial marketing, open or closed bids are

invited. Firms quote their prices, anticipating what the competitor would quote.


Demand-based pricing Methods

Method Description

Discrimination / Differential / Variable / Flexible

Products are sold at two or more prices based on customer segment, product-form, image, location and time.

Perceived-value Based on perceived value of each component of

the product, the price is estimated and

employed.

Psychological Based on attitudes of consumers in quality-

price relationship, (high price indicates high quality) odd prices (convey the notation of a discount or

bargain) and reference (a price on an average considered right for a product), prices are determined.

Value Pricing t o generate value satisfaction to

consumers. Every Day Low Pricing (EDPL) charges l o w p r i ce s o n a l l d a ys . High-low

pricing charges higher prices on ever day

basis but lower prices during special

promotion period.

Pricing strategy has to pass through three tests of effectiveness

I. Is it in tune with the expectations of customer?

II. Is it consistent with other P’s of marketing strategy?

III. Is it competitive enough to give the target market share?

Consumer Categories (Rural C o n s u m e r )

Category Annual Income Life Style

Quality conscious Over Rs. 1,50,001 Very rich

Value conscious Rs. 45,001 – 1,50,000 Consuming class

Price Conscious Rs. 22,001 – Rs. 45,000 Rs. 16,001 – Rs. 22,000 Below Rs. 16,000

Climbers Aspirants Destitute


Price in Marketing Mix

S.No. Rural Consumers Product Price Promotion Place

1. Quality conscious,

Concerned with

Functional benefits, Value for money

Premium Product

High High Show rooms, Malls,

hyper General and

Fancy stores

2. Value conscious Price sensitive,

Concern for Functional benefits No frills. Value for money

Mass Product

Medium High General and fancy stores, super

markets, Kirana, paan shops and Haats.

3. Price conscious No concern for quality

Spurious Products

Low No Kirana, paan shops

and Haats

Skimming Vs Penetration Strategies

Factor Skimming Use if: Penetration Use if:

Price elasticity of primary demand Inelastic Elastic

Price elasticity of selective demand Inelastic Elastic

Cost of production and marketing

relative to potential competitors

Higher Lower

Economies of Scale No Yes

Ease with which competitors will

enter the market

Difficult for them to

enter

Easy entry

Rate at which the consumer will

accept the concept

New concept (slow) Known concept (fast)

Market segments based on price Exist. Can be taken one

segment at a time

Mass market exits

The firm’s resources to produce and

market product

Small or restricted Large


7. PROMOTIONAL STRATEGY

Promotion has become the biggest challenge, to rural marketers today.

Rural marketers have to skillfully communicate with a much larger but scattered audience

characterized by variations in language, culture and lifestyles.

Poor message comprehension and low media exposure only add to the problem of

communication through mass media.

The requirement is three folds:

1. To explore the available media at the different locations.

2. To develop region-specific consumer profiles to understand the characteristics of target

market.

3. To design right communication and motivation strategies to induce target audience to

buy the product.

EXPLORING MEDIA

Promotion media may be classified broadly into three categories: Mass media, local

media and personalized media. The various media vehicles are given below.

Mass Media Local Media Personalized Media Radio Haats, Melas, Fairs Direct Communication Cinema Wall Paintings Dealers Press Hoardings Sales Persons TV Leaflets Video

Vans Folk

Media Animal

Parade Transit

Media

Researchers

Mass media like TV are gaining ground in the rural market through regional channels but one

cannot deny the importance of the Local and Personalized media.

With the low cost of Local media and its effectiveness it is gaining importance in the rural

markets.


DESIGNING RIGHT PROMOTION STRATEGY

In designing the right promotion, the considerations are:

Approach Same or different

Design

(i) Message

(ii) Media

(iii) Communications

Rational or emotional or moral

Mass, local, customized one-to-one

Advertising, sales promotion, publicity and

personal selling.

Budget allocation

Media mix

Approach: Same or Different?

The controversy regarding the validity of a universal approach to attract urban and rural

consumers may continue for some years to come. Until all the rural areas are almost

equally urbanized, marketers have to pay heed to the voice of experts. Based on its

survey findings, A.P. Lintas advocates:

“In mass media, a different idiom for rural India is not required. The chasm between rural and

urban India is narrowing”.

Ogilvy Rural Communication Network (ORCN) considers rural specific promotion is necessary.

“Advertisements for the rural markets must be relevant to those markets if they are to

create brand awareness and penetration. For advertisements to succeed, companies have to

adopt the principle of multi-national companies i.e., think global and act local.”

These two viewpoints are valid, as they represent two different markets of evolving rural

markets. It is for the individual marketing manager to find out the applicability of the views.

When we observe the practices of leading consumer companies, we find that they are

following a more localized and personalized approach in the selection of media and designing


of messages. The time has perhaps come for advertising agencies to look into issues specific

to the regions and also at the products, to succeed in the large rural markets.

7.1 DESIGNING PROMOTION

The process of designing promotion mix with appropriate message, media and

promotions is not an easy task. It involves the following steps.

a) Determining communication objectives.

b) Creating message content or appeals.

c) Evolving message structure.

d) Developing message format.

e) Choosing message source.

f) Selecting the channel.

g) Deciding on promotion mix.

h) Establishing promotion budget.

(a) Communication objectives: After analyzing the characteristics of target audience and

identifying available media, the next step is Setting Communication objectives. The market

may seek one or more of the following objectives.

1. To achieve awareness among a certain percentage of target audience.

2. To improve product knowledge among target customers.

3. To strengthen liking or preference to buy the product.

4. To persuade the consumers to buy the product.

In urban markets the emphasis is on brand switching and promoting more usage. But in the

rural markets, many companies are rightly emphasizing on brand awareness building objective.

This is the route for more and regular sales according to HLL, Philips, Godrej and Dabur.

In 1990, TVS launched TVS-50 XL as a value-for-money vehicle. This venture was supported

by massive advertising campaigns on television to increase awareness of the brand. By then,

many villages had TV and TVS spent around Rs.1.5 crore on the Namma Ooru Vandi (our own

vehicle) commercial which showed people from various walks of life swearing by TVS-50 XL.


(b) Message content: Messages are to be created to induce, inform and persuade target

audience. There should be a theme, an appeal or a unique selling proposition (USP)

touching the heart and stimulating the mind. There are three types of appeals: rational,

emotional and moral. They are briefly explained and illustrated in the following table:

APPEAL ASPECTS EXAMPLES

Rational

Benefits: Quality, value,

performance, etc.

Hero Honda Fill it, shut it. Forget it. Three

rose tea: color, taste and flavor

Emotional

Positive: humor, love, pride and joy

Prestige pressure cooker: Those who love

their wife cannot say no to Prestige

pressure cooker

Negative: Fear, guilt, and shame

Onida: Neighbors envy, owner’s pride

Moral

Right behavior, social causes

Aids campaign. Fight cancer

Campaign

(c) Message structure: The arrangement of the message in an appropriate order for

presentation is as important as message formulation. The message is structured by words

sentences and paragraphs. It can be:

Tall or short

Linear or non-linear

Tall structures become essential when a marketer desires to explain the product benefits or

company's standing on an issue. Generally, for product promotion short structures with brief

messages will be more effective. In the case of rural, pictorial presentations make better

impact than verbal descriptions, since their ability to read and understand is limited.

Linear stories work well with rural consumers unlike urban consumers, they cannot process

non-linear messages. Simple logic, sequential ordering of thoughts, easy to understand

arguments and clearly drawn conclusions, are essential to make communication


effective.

(d) Message format: The components of the message and their presentation are important

aspects in message design. Different media provide different opportunities to format

the messages.

Media Format aspects

Print ad Headline, copy, illustration and color Radio

Words, voice quality and vocalization

TV/Person Words, voice quality, vocalization and body Language

Pictures, dramatizing voices, attractive expressions and color have more influence on rural

consumers.

(e) Message source: If both, the person delivering the ~ and the message are credible the

message will achieve the objectives set for it. As such, marketers not only make efforts to

create appropriate messages but also try to choose attractive, popular or expert sources.

The credibility of a source is determined by three factors.

Expertise

Trustworthiness

Likability

The Table below illustrates the use of celebrities, professionals, common persons or

elderly persons to endorse the products.

BRAND CELEBRITY CHARACTERISTIC IMAGE

Agni tea

Horlicks

Tea

Sridevi

Couple, elderly

Ustad

Attractiveness

Trustworthiness

Expertise

Energy

Dependable

Skilled


Cine stars Govinda and Dharmendra have more of a rural following. Escorts promoted its

motor cycle with the testimony of Dharmendra.

Escorts have marketed ifs big-wheeled Rajdoot with an understanding of the rural psyche, It did

not advertise in the TV or press, It adopted a focused approach, relying on geography and

market parameters like fairs, melas and so on. The advertising managed by Head Start (an ad

agency) was designed to excite the rural customer by Concentrating on what appealed to him.

The result: unforgetful Dharmendra and his Jaandar Sawari, Shandar Sawari.

(f) Selecting the Channels: Communication channels are of two types: personal and non-

personal. Mass communication is to be seen as a two-step-flow -of communication process.

Messages of marketer's flow from mass media (TV, press, and radio) to people who are

exposed to them. They become opinion leaders and through word-of-mouth disseminate

information to the less informed people. The personal and non-personal channels include the

following.

CHANNEL SUB-CHANNELS CONSTITUENTS

Personal Advocate channels Expert channels

Social channels

Sales people. Social workers. Professionals (Doctors, Bank manager) Neighbors, friends, family members and associates

Non- personal

Media

Print, TV, radio. Direct mail, websites, Hoardings, posters

Events Sports, music, festivals, melas, jataras, Haats.

Personal Channels: Personal influences have a significant role in the rural markets. Here

buyers are less exposed to media, and more community bonded. They sock opinions before


making f inal decisions. Companies can act ivate several sources to influence rural

consumers.

Distribute products through retail outlets, which facilitate interaction.

Create opinion leaders by supplying certain people with products on attractive

terms, or work through community influential such as local political leaders, doctors,

teachers, etc.

Develop advertising that has high conversational value or interactivity.

Train middlemen in interacting with consumers.

Establish Tele links for online transactions.

Distribute products for interaction: Companies are realizing that distribution is not an

exercise in mere physical placement of products. It goes beyond; it needs to be animated by

people and atmosphere. Distribution will be effective when the consumers:

I. Find the outlet a familiar place for a confident entry.

II. Find the ambience appealing being compatible with their style of living and reflects

their aspirational needs.

III. Find the interaction with the retailer and his personnel pleasant and helpful.

MAL (Maharaja Appliances Ltd.) launched its campaign Bonus – a range of home appliances to

cater to the needs of rural consumers. The advertising outlay cost Rs. 2 crore. It was spent

mainly on wall paintings, in-shop posters and dailies. The advertising was extremely specialized

as the products were to be sold at Kirana stores, instead of large intimidating showrooms. The

importance of such strategies are that a close connection with the villagers, needs and

preferences are more likely to be established if the local vendor of vegetables and the like

pushes the brand. Continuous interaction will allow the vendor to gauge the response to Bonus.

Create Opinion leaders: Social norms and mores impact the rural consumers in ways

different from their urban counterpart. It is found that decisions are mostly opinion- driven.

They value social conformance in their decisions. As they live in communities, they prefer to

have social sanction for their actions. That is why there are brand villages- Escort village.


Nirma villages, etc. Wisdom of the elders, suggestions of the leaders, and advice of the

educated are sought with high regard by the rural consumers. As such, the Panchayat head,

the school teacher, the doctor, and elderly persons play a crucial role in the decision making

process. Accordingly, some companies have started giving more importance to positive

word-of-mouth campaigning through opinion leaders.

When Asian Paints launched Utsav range during the pre-Diwali season, the salesman selected

the opinion leaders in villages and painted the village post office or library or the house of the

mukhiya to demonstrate that the paint does not peel off. Moreover, the salesman organized

meets at the local dealers, where the village painters were invited.

The Reckitt & Colman (India) has tied up with non-government organizations (NGOs), which, in

turn, educate consumers about the hygienic aspects of Dettol vis-à-vis haldi.

Advertising with interactivity: Advertisements in newspapers and magazines have limited

value in rural areas. More than the radio, TV can impact rural audience by its audio-visual

effects. Compared to these ads, live demonstrations, programs like story telling (Harikatha,

Burrakatha, etc) or skits will be more powerful media as they provide scope for direct

interaction with the audience.

Brooke Bond L ip ton India Ltd . (BBLI) started an a l l Ind ia campaign . To build

awareness for its Kadak Chhap tea it added local flavor to its campaign. A local magician

was brought in to deliver the message under the garb of a skit. An element of interactivity

was added to the skit with one of the local boys enacting the role of the underdog Nathoo,

who kills the evil guys after he has had a strong cup of Kadak Chaap. At the end of the shows

everybody is given a sample pack.

Train middlemen: For a company to stay in the forefront. Its representatives should be

strong communicators. Their ability to inform and convince the consumers is significant as

the rural consumers are increasingly exposed to as many brands options as the

urbanites but with less education less media exposure and less experience Measures are


necessary to improve among middlemen the knowledge of products and skills of

persuasion.

Usha conducts biannual dealership conferences and workshops. Corporate Vision in New Delhi,

an outfit that trains sales force for companies like Hero Honda, Indo National that are limbering

up for a grand rural assault. They advocate the way sales team approach the rural market.

Tele links for online transaction: The information revolution is also sweeping the countryside.

The remote rural villages scattered far and wide are now being Tele linked with the world.

Villages are becoming netizens. Companies are talking an advantage of this new proposition.

In one respect Aragonda is a village like most others: disease is rampant and health care

facilities are practically non-existent. In March 2000, the health care tycoon C. Prathap Reddy,

Chairman of the Apollo Group of hospitals set up a Rs. 10 crore, 50-bed multi-specialty rural

hospital there with the country’s first Tele medicine center at a cost of Rs. 17 lakhs. Now

diagnosis and consultation are available to patients in villages at the same speed and cost at

which it is offered to the city dwellers.

Non-Persona, Channels: When it comes to selecting a media, one has to keep in mind that

mass media reaches barely 30 per cent of the rural audience. It makes little sense to use this

to reach out to the rural consumers, unless it is used as a supplementary tool . Infact, the

major sources of informat ion gathering and entertainment for the rural consumer

continue to be local events and the best way would be to physically reach out to them by

becoming a part of their daily life. Companies that have attempted to use local idioms to

convey product message in a meaningful context had more success.

For its Tiger brand, Brooke Bond Lipton India Ltd. Often creates Sherdil Jawano Ka Adda within

its stalls. The Adda offers the local men a chance to test their strength at the grip machine. To

increase the traffic to the stalls the decor is changed regularly. Company hires announcers to

lure villagers by offering special price-off, discounts and tree gifts.


(g) Deciding on Promotion Mix: Besides advertising, a company may utilize one or more of the

promotional tools. For example, sales promotion, direct marketing, publicity and personal

selling.

(i) Contests and Demonstrations:

In 1991, TVS made its moped TVS-50 XL more powerful. To demonstrate this, and to get the

maximum number of people or to a TVS-50 XL, a contest was held. The XL managed to carry 19

people, a payload of over 1000 kg and still able to run. TVS used this as a road show in many

villages, to demonstrate its load bearing capacity. Ambience (ad agency) created a commercial

on this.

(ii) Sampling: Generally, people tend to be conformists. The propensity to try a new product is

less among people, particularly in the rural areas. Besides Advertising, there should be some

promotional measures to induce consumers to buy the products. Sampling as a promo tool

does this job. While advertising creates awareness, distribution of samples achieves both

brand awareness and conviction.

The efficacy of sampling in rural areas is, however, debatable. Marketers have varied

experiences and different opinions. They are summarized here:

AGAINST

Conversion lags: Conversion does not take place easily and immediately. It is a long process.

A case in point could be Kellogg’s, which took .1 long times [0 convert urban dwellers to

take to breakfast cereals. So, one can imagine the time it would take to convert rural folk to

brands.

HLL in its operation BHARAT project supplied hampers for Rs. 5, 10, 15 and 20, each of which

had a Clinic Shampoo bottle, a tube each of Pepsodent and Fair & Lovely, and Pond's Dream

Flower talc, in different sizes and combinations. It presented solutions to hair care, dental care,

skin cares and body care. As many as 160 vans were employed but the operation did not add

new users as HLL had envisioned.


Brand registration: The purpose of sampling is not brand sales. It is brand registration.

Brand registration is vital in the rural perspective because it may then spread to other

products under the same brand umbrella, such as Clinic Plus, hitching a ride on the benefits

awareness of Clinic shampoo. Sampling goes a long way in the registration of the brands the

minds of the rural folk.

Brand Conversion: With more number of brands competing for the attention of rural

consumers. Conversion to a better brand in the same category is a rather difficult

proposition. So sampling is perhaps the only way to achieve this conversion the

expected immediate effect of sampling, therefore, is brand registration. Even this

requires the support of sales promotion measures to make the brand a talk of the village.

HLL, for Lifebuoy, integrated a value proposition by distributing height charts to about 9000

schools and Laxmi calendars to 18,000 shops in as many as 4000 villages to make every one talk

about Lifebuoy. The height charts were added to attract younger generation, the decision-

makers in many a rural household.

(iii) Installment Schemes: Rural consumer would not have much use for a monthly

installment finance scheme as in an agrarian economy, income is generated primarily at

harvest time. However, there are some success cases.

In 1990, the price of the moped TVS-50 XL was around Rs. 8000. At that time, consumer finance

schemes were not widely available. In the rural areas, the financier was the local moneylender

who charged exorbitant interest rates. Seeing that, TVS introduced the Rs. 399 scheme. This

was the first time that a vehicle was available on installments of Rs. 399 for a 24-month period.

It appealed to the rural, customer because he could now buy a two- wheeler at a down

payment of less than Rs. 400. There was a spurt in sales from 6000 units a month to 10,000

units per month. The company also roped in local moneylenders to act as financiers for the

moped. TVS charged an interest rate of 14 per cent, while the moneylenders could arrange

upto 18 per cent. The only stipulation laid down by the company was that the initial amount

could not exceed Rs. 399. The scheme continued and in 1998 the installments were raised to

Rs. 666 per month.


This view is gaining strength with increasing competition among companies and the

growing power of retailers. They are finding it difficult to retain shelf space and displays in the

retail outlets the current view as such, is:

"If you depend entirely on your wholesalers now, you are bound to lose your market to

the competitor. There is no substitute for stretching direct communication to the farthest".

In the rural context, personal one-to-one communication is effective. Such relations can be

established through sales persons and mailers. Brushing aside wholesales and dealers,

companies now have "direct points of contact" with retailers and sub-retailers.

Videocon is focusing on making its presence literally felt in the villages. The mechanics of the

company, take a round of the villages twice a week to assure the villagers of after sales service

as an important component of consumer durables For this purpose, the company employed

1800 engineers.

(h) Communication budget: There should be an objective analysis of the goals and tasks of

communication for determining the size and allocations of budget. The rural advertising

budget of companies is generally between Rs. 6 and Rs. 15 crore. Though it does not seem

much, according to an expert, Rs. 10 crore spent in the villages achieves the same visibility as

Rs 50 crore in the towns and cities. MNCs like Samsung are spending Rs. 40 crore on

advertising in semi-urban areas.

7.3 DISTRIBUTION STRATEGY

Many companies view the rural markets as great opportunity for expanding their sales but find

distribution as a major problem. Unfortunately, it is almost impossible to transplant

strategies which work successfully in urban markets onto rural markets, namely,

extensive retailing and sustained pull generation through mass media advertising.

The road blocks to reach the rural customers are:

Lack of adequate transport facilities.

Large distances between villages.

Lack of pucca roads connecting villages to nearest townships.


Lack of proper retail outlets

Lack of mass media infrastructure.

The marketers were of the opinion that the villagers would come to nearby towns and buy the

products that they want.

What has been found is that if we have to serve the rural consumer we will have to take our

products to him through the channels that he is using and some innovative ways of getting

to him.

7.4 THE OLD SETUP

The historically available people & places for distribution include: - Whole seller,

Retailer, Vans, Weekly Haats, Bazaars.

1. Wholesalers: The Indian wholesaler is principally a Galla – Kirana (food-grain) merchant

who sustains the belief that business is speculative rather than distributive in character. He is a

trader / commodity merchant rather than a distributor and therefore tends to support a

brand during boom and withdraw support during slump.

The reason for this speculative character and dormant role of wholesalers are: -

Indian market was largely sellers’ market. There was no need for active sales growth.

Companies laid more emphasis or retailers in urban areas, who are very large in

number. As a result of retail based distribution was weakened.

Rural markets were neglected by many. The occurrence of retail outlets was low.

Therefore many companies were dependent on wholesalers.

The current need is to activate and develop wholesaler of the adjoining market as a distributor

of products to rural retail outlets and build his loyalties to the company.

2. Retailers

Village retailers have traditionally been among the most mobile of rural residents. Often

doubling up as money lenders.

Their multi – person interaction in the closed village society. As result retailers play a significant


role.

I. Credibility: -

He enjoys the confidence of the villagers.

His views are accepted and followed by the rural people whose awareness and

media exposure levels are low.

The urban retailer is not trusted.

He is seen as a businessman with profit motto.

His view points are evaluated with other sources of information.

II. Influence leader: -

His role as influence leader is indisputable. From tender twig of neem to washing

powder retailer testimony has been vital part of the product adoption process.

The role of urban retailer is weak.

The urban consumers have numerous sources of information.

Although retailer’s opinion is sought it may not be 100% believed and followed.

III. Brand promoter: -

In rural market retailers remains the deciding factor to sell particular brand.

Retailers helps in identification and selection of brands, there is less influence of shelf

displays and point of purchase promotion.

Presence of spurious brands is an ample testimony to this view.

The urban retailer has a limited role as a brand promoter.

He cannot directly, recommend the brands.

He is to intelligently drive home his recommendations, as urban consumers do not trust

him completely.

It is through shelf displays and incentive offers that he has to push the brands.

IV. Relationship marketer: -

Village retailer practices relationship marketing.

He caters to a set of buyers who have income from immovable land resources and

would be static over a much longer time span.

The relationship could extend beyond three generations, backed by historical


credibility of the retailer as a product referral.

On the contrary, the urban retailers have to make an effort to adopt relationship

marketing.

His customer’s base comprises largely the mobile service class prone to shift residence

at least once, if not more, in less than a decade. This limits the time span and

perspective of the retailer – customer relationship.

V. Harbinger of change: -

In an environment relatively isolated from external developments, he has been

harbinger of change.

He is one of the main sources of information and opinion as well as supplier of product

and services.

3. Vans: Mobile vans long since, have an important place in distribution and promotion of the

products in villages.

JK Dairy launched whitener ‘Dairy Top’ in small 50 gm. sachets priced at Rs. 6.50. It decided

to make a concerted foray into rural India in 1996. It hired vans to penetrate the rural interior,

each van traveling around 125 km a day, 25 days a month.

4. Weekly Haats & Bazaars: The haats are the oldest outlets to purchase household goods

and for trade. These markets are very well organized with shopkeepers having pre-assigned

spaces for them to sell their wares. A typical market is in an open field with ample space

for displaying all sorts of goods. Its location changes every week. These markets have

different names in different regions. But they are strikingly similar in what they sell. It is

reported that there are, in all, about 47,000 haats held throughout the country.

Convenience: The entire market can be related to large departmental stores in cities, where

the advantage is a one-stop shopping exercise. These outlets crop up every week, providing

consumers immense choice and prices.

Attractive: The weekend shopping is not only convenient but also entertaining. The markets

start early and will be over by lunch. Afterwards, there will be entertainment. In respect


of transactions, it is an attractive place to those who want to buy second hand durables and

to those who prefer barter transactions. Further the freshness of the produce, buying in

bulk for, a week and the bargaining advantage attract the frugal and week-long hard

working rural folk.

Availability: It is a market for every one and for everything. Household goods, clothes,

durables, jewelry, cattle, machinery, farming equipment, raw materials and a host of products

are available.

5. Melas and Fairs

This is another low cost distribution channel available to the marketers. It is comparable with

urban events like Wills Trophy, India International Trade Fair (IITF), Sajavat or Consumex in

which audience participation varies from a few thousands to a few lakh people. These melas

are ancient and part of Indian cultural heritage.

The Janpad Pradarshani aur Pashu mela, held every year at Etawah in Uttar Pradesh first

took place in 1899, after which it was discontinued for want of patronage. It received a

fresh lease of life in 1910, with grants and donations from local residents. Close to Etawah is

Bulandshaar where Zila Krishi Udyogik Pradarshini is even older; it was born in 1881, as the

imperial show under the aegis of then British Collector.

Most of the fairs are associated with either a religious event or a festival. Among the most

famous melas is the mighty Kumbh Mela at Allahabad (Triveni Sangam), Pushkar mela in

Rajasthan, Kullu Dusshera mela in Himachala Pradesh, Sonepur mela in Bihar and Makar

Vilakku in Kerala. People from all over the country gather to taste the wonders of India.

According to the Indian Market Research Bureau (IMRB) around 8000 melas are held in rural

India every year. According to Rural Scan (Quarterly Newsletter by MICA (Mudra Institute of

Communications, Ahmedabad), there are on an average, 1000 melas held in a state annually.

The average duration of a mela is anywhere from one to 45 days.

The interesting questions are: Do these meals provide an opportunity for sales? How are they

organised? At a mela there can be as many as 854 stalls. Some 18.4 per cent of these are local


stalls (belonging to a few hundred villages), 40.8 per cent are regional (they belong to a few

districts) and 40.8 per cent are national.

An interesting statistic is that the share of manufactured goods at melas is around 42 per

cent. Like urban events these melas need little or no prepublicity. They have come to

occupy a firm position in the rural calendar of festivities. Most of the fairs are associated with

a religious event or a festival. As with religious events, the dates of most fairs are

determined by the Hindu calendar, not the Gregorian one. Most fairs are expressions of local

need to celebrate. A villager, who has attended it since his childhood looks forward to it

months in advance.

A majority of the melas are held during October-November and January-April. This

coincides with the Kharif and Rabi harvests when the farmer's purchasing power is high. With

both money and leisure at hand, he is inclined to indulge his family with a day out at the

mela. He also looks forward to updating himself on the latest farming practices and on

consumer goods. Visitors to fairs are thus highly receptive to try out new products and also

come with enough money to do so.

7.5 THE NEW PLAYERS

Selling in rural India followed a pattern, till recently. But with the entry of new players, and

the surge in rural demand, the structure and dynamics are altering.

1. Unofficial Channels

Consider Hero Honda Motors. Its 360 dealers all over the country has reported the

emergence of an unofficial channel of distribution – village mechanics, local real estate

agents, shopkeepers who sell non-durables and so on. These people are taking motor cycles

from the official dealers – usually in twos and threes – displaying them outside their premises

and closing a sale. The paper work, though, is left to the dealer to complete.

2. Cooperative Society

Cooperatives occupy an important place in India's rural economy, in terms of their

coverage of population and their share in total supply of agricultural inputs, including credit.


District Level Cooperative Marketing Societies : 191

State Level Cooperative Marketing Federations : 29

Commodity Cooperative Marketing Federations : 22

Regional Cooperative Marketing Societies : 11

India can rightly claim to have the largest network of cooperatives in the world. By 1994,

there were 3.95 lakh cooperatives. Cooperatives in 1999 account for 62 per cent of the total

credit supplied in rural areas and 34 per cent of total quantity of fertilizers distributed in the

country.

Rural Scan reports that there are 4398 Primary Marketing Societies and 2933 Large

Agricultural Multipurpose Primary Marketing Services (LAMPS) in the country. Other

members are:

Generally, a cooperative exists for 2 or 3 villages. Farmer's Service Cooperatives (FSCs) is a

mini super market. Such an arrangement can be tried with others.

3. Public Distribution System (PDS)

The Fair price shops run by government can be utilized to sell consumables and low value

durables.

4. Petrol Pumps

Petrol pumps have become multi-purpose distribution centers at some places. Such

concept can be effectively promoted.

5. Agricultural Input Dealers

Fertilizer companies have retail outlets within a range of 5 km to any village. They offer a scope

for marketers.

6. NGOs

Another alternative is working with Non-Government Organizations (NGOs), which reach

interiors of villages. Ideologies and methods may vary but most NGOs have programs

focusing on sustainable development through providing avenue for income generation. They

command substantial influence where the programs are implemented.

Companies may join hands with them to mutual benefit. With NGOs undertaking distribution,


companies realize benefits accruing from infrastructure and grass roots level networking.

Also organization security would provide a buffer against delayed retail collections. From the

NGOs standpoint, such association with companies could yield employment opportunities for

local residents.

7. Barefoot Salesmen

Companies may train sons-of-the soil to operate as barefoot salesmen. Fluency in the local

dialect and familiarity with persons and terrain in the area of operation would be among the

factors enhancing the efficacy of this approach.

A barefoot salesman, operating on a retailer-cum-commission basis, could book orders from

retailers in villages within a limited radius of his village. On aggregating orders, which permit

distribution economies, he could coordinate with the area stockiest to arrange deliveries

and make collections.

8. Syndicated Distribution

A viable and novel approach to reach the rural markets is syndicated distribution. Under this

approach, marketers of household products could group together and consider the

formation of a syndicated trading organization which could jointly distribute a collective group

of household products in the rural market and enjoy shared economies. The guidelines

for formation of the syndicated organization may be as follows:

Guidelines:

Companies willing to work together may contribute to the capital of the organization.

It could be privately held and need not be open to the public or government agencies.

The distribution by this organization may replace or supplement the existing

distribution.

A formula for expense sharing is to be worked out in advance by the participating

organization.


7.6 NEW APPROACHES

1. Distribution Trends

The changes in distribution are not only baffling but also challenging.

Element of sales From To

Time Restricted, limited timings Unrestricted, anytime Place

Own retail outlet, occasionally public place

Anywhere

Choice

Limited to brands

Any product – to all specification, unlimited choice

Sales

Products

Products, experience relationships, achievement

Result Customer satisfaction

Customer participation and satisfaction

2. Direct To Home Selling

Companies are embarking on “Direct – To – Home” selling (DTH) even in rural area. It provides one – to – one communication as well as sales without reliance on

retailers. The 2 forms of DTH are: -

(a) Network Marketing

(b) Internet Marketing

(a) Network Marketing: - is a form of direct selling. It can take place at 2 levels.

Single level – distributor appoints sales persons. He earns profits on sales, made by him.

Multi-level – distributor introduces another distributor (a friend or relative in general) who in

turns introduces another distributor.


Like that the network is created. The “Network” markets products. Each distributor gets profits

on his sales and also a percentage on sales made by his “Network”. Thus one earns by

“Retailing and Recruiting”.

The Rural Applicability: -

The introduction of network marketing in rural markets will be beneficial not only to the

companies but also to the villagers. HLL’s project SHAKTI is adaptation of network marketing.

(b) Internet Marketing: - Although at present due to low penetration of Pc’s it is not a viable

media. But some agencies and companies have started using this medium in a collective way to

distribute information and products. E.g. TAARA HAAT (DA), E – CHAUPALS (ITC).

3. Relationship Marketing: - HLL

HLL is involved in building relationships with the customers in rural areas through education

programs, home – to – home contacts and cinema shows.

Focus: The objective in rural areas is to tap first time users. Statistics indicate low usage

patterns.

In China 90% of the people use toothpaste compared to 47% in India.

Only 20% have visited a Dentist.

About 27% use toothpowder.

Even urban areas where majority of people use toothpaste right from childhood, the

overwhelming majority uses toothpaste only once in the morning whereas teeth required

brushing most at bedtime.

Strategy

(a) Product: - HLL has introduced a 15 gm. Pepsodent pack to target the first time user.

Close – up is introduced at retail outlets in suburban and rural areas with a price tag of Rs. 3.50


(b) Campaign: - the operation, bharat program. HLL’s door – to – door campaign in rural areas

concentrates on educating the consumer by holding free dental camps. In India there is

scholarship for students in dental colleges for collaborating in research at such centers. Dental

check-up camps are conducted in schools. A rural hygiene program a counterpart to urban is to

cover 350000 villages and has target of reaching 20 crore people.

(c) Door – to – Door sales: - in this HLL is selling a discounted personal care kit containing mini-

packets of shampoo, toothpaste, talcum powder and face cream. The kit is sold at Rs. 15, Sold

separately the products would together cost Rs. 27

(d) Cinema: - after home – to – home contact and sales in villages during the day, HLL

concentrates on cinema time in the evenings. There are still villages which do not have TVs;

hence cinema shows are quite popular.

7.7 COMPARISON OF RM, NWM & IM

Aspect RELATIONSHIP

RM

NETWORK

NWM

INTERNET

IM

Seller Company or its

agents

Consumers Company or its

DOT.com agents

Role of consumer Buying and

evaluating

Buying, evaluating

and selling

Buying and

evaluating

Focus

Foster relationship &

loyalty

Strengthen

relationships of

consumers

To be built

Supply

Products,

Experiences

Products

achievements

Products

Experiences, choice

conveniences

Browsing experience

Limited

Limited

Unlimited

Choice Limited to brand or

category

Limited to brand or

category

Any product

customization

Time

Fixed and limited Flexible, but limited

by convenience

Any time

Place

Retail outlets

Any where

Any where


Cost

High

Low

low

8. PRODUCT STRATEGY

The central decision in marketing mix is product decision. Product classifications: -

(i) Based on Tangibility

Products

Services

(ii) Based on the purpose of use

Purpose

Type

User Products

Consumption

Consumer Goods

Household

Toiletries, Cosmetics,

Beverages etc.

Production

Industrial / Agricultural

Goods

Industries Farm / poultries etc.

Raw materials

components, agricultural inputs and machinery etc.

(iii) Based on the functional life of the product

Type

Nature of use Functional

Life period

Example

Consumables

One time

Short

Food & beverages

Durables

Life time

Long

Furniture,

Computers, cars and

cameras


(iv) Based on habits

3 categories based on shopping habits: -

Goods

Product Type

Buyer involvement / frequency / buying decision

Buying place

Convenience Goods

Consumables

Low / frequent / simple

Paan shop, kirana shop, Cooperative stores, fair price shops, fairs & mandis

Shopping goods

(clothing,

furniture,

home

appliances etc.)

Durables

Moderate / occasional /

complex

Fairs, haats, mandis & shops in feeder towns.

Speciality

Goods (camera,

two wheelers,

tractors etc.)

Durable High / Once in life /

complex Shops in towns or cities

(v) Based on the price and quality

2 types of goods are identified: -

(a) Mass product (cheaper and economy goods)

(b) Premium product (superior goods)

Cheaper goods are those, which are characterized by, low quality and low price. They perform

core functions but lack certain attributes, which make their use less comfortable, less pleasant

and less desirable. E.g. Nirma washing powder is cheap good.


The package is poor. Powder spills over. When the powder is mixed in water, burning sensation

is felt in the skin and palms.

Economy goods are products with all necessary functional features but no fancy features. Its

price and quality are fairly reasonable. In case of durables, its operating and maintenance

expenditures are low. As such, they are money savers while being needs e.g. TVs without

remote etc.

Premium goods are such products, which appeals to the ego of the buyer. They are described

as, goods for premium consumption. E.g. Jewelry, cars etc.

(vi) Based on product development

Innovations

Imitations (novelties, copycat)

Innovations: - innovate products rule the market. An innovate firm will surely succeed.

However, it should be careful in making technical innovations in tune with changing market

behaviors.

Imitations: - imitations may result in two types of goods depending upon the purpose,

commitment and competence of imitator. A poor imitator will end up in producing deceptive,

spurious, fake copycat products.

(vii) Based on brand hierarchy level

There are 5 levels of products based on branding.

While urban market is exposed to the 5 different brands, rural market is now finding the

national and global brands at their threshold and doorstep.

Global brands Pepsi, Coke, LG, and P & G

National brands Godrej, Tata

Regional brands Sun TV Channel

Local brands Surya Masale, Joy Chips


Unbranded products Oil, Food Grain, Tongue Cleaner

Commodities Tamarind, Cloves, Fish, Eggs

8.1 CONCEPT AND SIGNIFICANCE OF PRODUCT STRATEGY

Product strategy refers to the long – range competitive plan involving decisions on: -

Products

Product line and

Product mix

An effective product strategy offers the following benefits.

(i) Achieves Product – Market Fit: -

A well thought out product strategy will be able to offer products based on market needs. Thus,

it achieves product market, fit and avoids the pitfalls of marketing myopia consequently it

provides insurance for survival.

(ii) Encourages Innovativeness: -

The key to product strategy is innovation with a view to fine tune the market offer to the

current and future needs of consumers.

(iii) Provides Competitive Edge: -

Marketers need good intelligence on how to anticipate competitive moves and launch their

new products. Companies will have to use product strategy to attack their competition

depending on their positions and Wage guerilla warfare.

(iv) Makes Better Use Of Resources: -

The product additions and deletions, based on rational appraisal of marketing and production’s

strengths and weakness. It allows for better utilization of physical, financial and human

resources.

SCOPE

Product strategy embraces decisions a 3 level.


Product mix

Product line

Product item

Product strategies – an overview

Level Strategy

Product mix

Width extension – new product lines

Length extension – new product items

Depth extension – new product variant

Product line

Stretching – upward, downward, both ways

Line pruning

Product item

Quality, features, design brand and package

Augmentations

Product line is a group of closely related products priced within a range and distributed through

same channels to the same customer group. It has two dimensions: -

Length

Depth

Length refers to the total numbers of items in the line.

Depth is the total number of product items.


1. Length of product line: -

How long should be the product line? It is like asking “how long should the legs be?” The reply

to this question is: - “long enough to reach the ground.”

Similarly, product line length should be evaluated in the light of company profitability. If

profitability can be increased by dropping items, the existing length is more than necessary. If

profitability can be increased by adding items, the existing length is short. It should be neither

too short nor too long.

Arguments in favor of short and long lines are summarized below: -

Short line Long line

When focus is on

Specialization.

If companies want to be positioned as full line

companies. As a consequence of

contraction

defense strategy

As a result of flanking strategy

If profitability is

the objective

If market growth and

Market – share are the objectives.

When line pruning is done.

Loss making products are

Dropped.

Product line proliferation

Zealously new products are added.

Line stretching: - is lengthening the product line beyond its current range.

The stretch can be in 3 directions: -

Downward adding lower end items.

Upward adding high end items.

Both ways adding items at both higher and lower ends.

Reasons: -

Reaction – as a reaction to competition, innovative product items are added.


Opportunity – to utilize the existing market gap, new items are introduced.

Image – to have a full line company image, rolling upward or downward or both ways is done.

Pressure – yielding to pressure of sales force and dealers, new product items are introduced.

Strength – to use the excess capacity, line stretching is done.

Desire – to fulfill the desire of top executive or product manager, to introduce a new product

item, line stretching is done.

2. Line Pruning: - product lines tend to lengthen over time. Sometimes they are stretched on

rational grounds at other times; they are lengthened because of emotional reasons. In either

case, some dead wood will accumulate.

It is weeded out based periodical review of the contribution of product items. The product

items can be classified as: -

(i) Traffic Builders: - which attract customers but generate marginal incomes.

(ii) Bread Winners: - which generate major share of incomes.

(iii) Parasites: - which incur losses and depend on bread winners

Product line pruning may be done when

It is identified that dead wood is depressing profits, and

It is found that the production capacity is limited and cannot handle all the existing

products.

E.g. HLL has pruned 80 strong brands, portfolio to the 30 power brands, which account for 75%

of its FMCG turnover.

3. Line Modernization: - when technological developments change the products, a decision to

revamp the old line and design a modern line become inevitable.


The aspects to be considered are:-

(i) Timing: it should not be too early or too late. The timing decision requires information about

“Conversion readiness of consumers from old or new products”.

(ii) Approach: whether the change is total or piece meal?

The merits (+) and demerits (-) of these two approaches are given below:-

Total

Piece-Meal

- requires heavy cash flow

+ less draining on company’s cash flow

+ surprise competitor no chance to imitate - allow competitors to see changes & start

designing their own time

- implementation to change involving dealers and

customers is difficult

+ people affected by change easily understand

and adopt


CASE STUDIES

COCA – COLA INDIA

The Coca-Cola Company is the global soft-drink industry leader, with world headquarters in

Atlanta, Georgia. The Company and its subsidiaries employ nearly 30,000 people around the

world. Syrups, concentrates and beverage bases for Coca-Cola, the Company's flagship brand,

and over 160 other Company soft-drink brands are manufactured and sold by The Coca-Cola

Company and its subsidiaries in nearly 200 countries around the world.

During the past decade, the Coca-Cola system has invested more than US$ 1 billion in India.

Coca-Cola is one of the country's top international investors. In 2003, Coca-Cola India pledged

to invest a further US$100 million in its operations. Coca-Cola business system directly employs

approximately 6,000 local people in India. In India, it indirectly creates employment for more

than 125,000 people in related industries through our vast procurement, supply and

distribution system. Virtually all the goods and services required to produce and market Coca-

Cola locally are made in India. The Coca-Cola system in India comprises 27 wholly-owned

company-owned bottling operations and another 17 franchisee-owned bottling operations. A

network of 29 contract-packers also manufactures a range of products for the Company. The

complexity of the Indian market is reflected in the distribution fleet, which includes 10-tonne

trucks, open-bay three-wheelers that can navigate the narrow alleyways of Indian cities, and

trademarked tricycles and pushcarts. The Company ranking up "firsts" in the introduction of

canned and PET soft drinks, vending machines and backpack dispensers for crowds of cricket

supporters.

A common trend that is seen in the promotional advertisement campaigns of soft drinks, is the

presence of popular film stars and celebrities – right from Amitabh Bacchan, Sachin Tendulkar,

Shahrukh Khan for Pepsi, Hritik Roshan, Aamir Khan, Aishwarya Rai, Sunil Gavaskar for Coca-

Cola, Salman Khan, Sushmita Sen for Thumps-Up to sonali Bendre for Limca, the trend

continues. This is probably because the Indian consumers are very influenced by film stars and

are big cricket fans and marketers still prefer to rely on building top-of-the-mind advertising.


Also, most marketing people tend to get evaluated on parameters like brand noticeability and

brand preference. That is why most of them eventually fall back on celebrity driven advertising,

which quickly improves noticeability.

As 30% of Coca-Cola’s sales comes from the rural markets where the potential for growth is still

high compared with a relatively saturated urban market, the company wanted a separate rural

strategy, hence the Aamir Khan-featured commercial “ Thanda Matlab Coca-Cola” ( a campaign

that immediately provoked a retaliatory campaign from pepsi staring Rahul Khanna and

Fardeen Khan ). The “Thanda….” campaign was conceived during a brainstorming session when

someone pointed out that “thanda” (cold) is the soft term for soft drinks in local parlance –

especially in the rural and moffusil areas. This campaign intends to push the recently

introduced 200ml Coca-Cola pack which is increasingly becoming accepted in rural areas.

Coca-Cola has however undertaken a different set of advertising campaigns in the Southern

market (as the south is a big cola market). The four southern states are in really different

countries. For example there is a promotion going in the North which will start soon, it will not

be implemented in Tamil Nadu or Kerala where they will have their own promotions. The things

that work well in the rest of the country do not work well in Tamil Nadu, Kerala or Andhra. For

example when they did tie-ups with movies like Hum Saath Saath Hain and Kaho Na Pyar Hai,

starring big names from Bollywood they didn’t do well in Tamil nadu nd all the activities they

did around these movies, also didn’t fare well. The people here do not relate to these stars. In

Tamil Nadu it is always believed that movies and music have a large following. The trend is

similar throughout the country, but accentuated more in Tamil Nadu. If you take the case of

Vijay, when Coca-Cola finished the ad, many of his fan clubs came and took his Coca-Cola

posters to be displayed at vantage places in and around theatres screening his recent movies.


TATA SALT

Tata Chemicals’ salt story began in 1983, when it needed fresh water for the boilers that

produced soda ash at its Mithapur plant. Fresh water was scarce, so the company set up a

process to generate it by using seawater, a freely available resource. Salt, of high quality and

purity, was a by-product. Both UNICEF and the Indian government were promoting the intake

of iodine for health reasons. ‘Salt is the most economical and convenient dietary vehicle for

iodine consumption’. Hence, these factors led Tata Chemicals to take up salt production. Ever

since its launch in 1983, Tata Salt has been synonymous with iodized salt in India.

The positioning statement used earlier was ‘Namak ho Tata ka, Tata namak’." The

communication was built around the fact that Tata Salt, India’s first iodized salt, was

manufactured by a Tata company.

Tata appreciated that in order to sustain a competitive advantage over a long period of time,

what is needed is for the consumer to perceive the company to be different from others. The

best way to differentiate is to connect with the consumer at an emotional level.

The challenge was to take purity, a rational product benefit, and create an emotional link with

the consumers. A new agency, Bates India, was chosen to work on the communication. A strong

fact that emerged from the research was that consumers were troubled about the gradual

erosion of nation’s value system. Another factor was that salt is deeply rooted in grassroots

values.

Tata salt spends about 15-18% of their sales revenue on promotion. The promotional strategy

used by Tata salt is Pull Strategy. It is based on the Brand equity appeal and Tata brand name.

“Tata Salt” is India’s fourth most trusted brand. This was highlighted by the study of reputed

Market Research Agency A.C. Neilson.

Tata Group follows the policy to give returns to the nation. Therefore, along with the ‘Desh Ka

Namak’ ad they came out with the ‘Desh Ko Arpan’ programme last year in 2002. The company


decided to contribute 10 paise on every packet of Tata Salt which is sold between August 15

and September 15’ 2003 and also January – February ‘2004, towards the education of deprived

girl children. The ‘Desh Ko Arpan’ programme encouraged ordinary individuals to make a

difference. Over Rs 35 lakh was collected in 2002 and given to Child Relief and You through this

initiative. The Promotional tools adopted by the company include advertising and sales

promotion.

Advertising:

The amount spent on advertising accounts for 7 to 8% of the sales revenue. They use mass

media communication like Television Ads, Print Ads, etc.

Print Ads:

They are printed in regional language newspaper and in the magazines in the regional language.

Like, The ‘Desh Ko Arpan’ Programme is been promoted through print media advertisements in

5 regional languages (Hindi, Marathi, Bengali, Tamil and Telugu).

Media Vehicles

Conventional Media-

(a) Television: For rural market they don’t have a separate advertisement but they play the

same advertise in the regional language.

Doordarshan- Tata Salt’s around 40% reach is because of its advertisements on Doordarshan.

It also advertises on Star Plus, NDTV, etc.

Regional Channels like- Alfa, Sun, Surya, etc. depending upon the State Language.

(b) Wall paintings: They also communicate to rural market through the wall paintings in Haats.

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. Considering this Tata Salt makes

ultimate use of this opportunity to educate the customers about the product.

(c) Video on Wheels: Tata Salt uses van marketing to reach the satellite villages.

Non-Conventional Media-

Kalnirnaya: Tata Salt advertises on Kalnirnay Calendars which are printed in 8 languages. Out of

the 1.2 crores calendars issued, 50 lakh are sold in Maharashtra. This advertising is a reminder

to the consumer of the Brand- Tata Salt which is in its Maturity stage.


COLGATE

Colgate Polmolive (India) Ltd.(CPIL), a wholly owned subsidiary of Colgate Polmolive

Company, US and a leading FMCG company in India is engaged in oral care and personal care

business.

CPIL incorporated in 1937 as a wholly-owned subsidiary of its US parent was forced to offload

60% of its equity in compliance with FERA. But with policy change allowing 100% FDI in industry

the parent company has again hiked its stake to 51% Oral Care Business CPIL market leader in

(he oral care business in India offers wide range scientifically proven oral care products (with

multiple benefits) i.e. toothpaste, toothpowders, and toothbrushes at various price points

under its flagship brand “Colgate”. The company dominates the Rs.1000 crore Indian

toothpaste market by commanding 50% of the market share.

The umbrella oraleare brand of the company ‘Colgate’ is a very popular name in the Indian

household and has a good brand loyalty. The company has launched more variants apart from

the flagship brand Colgate Dental Cream like Colgate Herbal Toothpaste, Colgate Fresh Energy

Gel and was well received in the market backed by aggressive promotions like ‘Talk to Me’

campaign for ‘Colgate Fresh Energy Gel’ The company also markets its tooth brushes under the

umbrella brand ‘Colgate’. The recent launch in this segment is Colgate Navigator toothbrush. In

June 2001, CPIL rolled out in India, Colgate Actibrush, an imported battery-powered toothbrush

at a price of Rs. 999, It will be available at select outlets. Will) this launch, the toothbrush

market of India is now segmented into manual and battery operated. Personal Care Business

CPIL which owns world renowned personal care brand ‘Polmolive’ is also a significant player in

the Indian personal care business by its offering of an array of bath soaps, liquid hand washers,

Shave preps and Skin care products. The Palmolive Shaving Cream is a Market leader in its

segment.

PALMOLIVE used mostly television and radio for the purpose of promotion lather than cinema

and print media. Because literacy level is low and frequency level of audience in cinema theater

is also low.


PALMOLIVE used other means of mass media such as hoardings, wall paintings, posters,

banners, gift schemes and jathras & melas for the purpose of promotion.

PALMOLIVE also runs special campaigns during crop harvest and marketing seasons. It is

beneficial lo take up special campaign in rural areas in these periods. Appropriate timing of

these campaigns is more important since the promotion should not only result in awareness

but also in adoption and purchases.

First a decision has to be made with regards to the product and then the brand choice has to be

made. In such cases personal selling and opinion leaders play a major role. PALMOLIVE

promotes their product through opinion leaders.

One of the important Promotion Strategies was to launch campaigns and programs mainly on

the awareness & diseases caused due to bad teeth.

Colgate did it with Rs. 8 crore ‘Operation Jagruti’ -an awareness program & strong distribution

network. Network of super stockiest & rural stockiest helped to the reach over 55000 villages.


CASPER

Tainwala has carved a niche in human hearts by providing protection and comfort. The buzz of

mosquitoes changes ZZZ of sleep as Tainwala switches on a world of protection for you and

your loved ones. That’s the power of CASPER – world’s largest range of mosquito repellents

which comprises of coil, mat. Liquid Vaporizer and wide models of machines. Tainwala

pioneered the concept of wet wipes in India, by manufacturing Wet cleansing tissue in the

brand name of Fresh Ones. When its hot and humid, Fresh Ones cares by reviving sagging

feeling and flagging moods.

Tainwala also manufactures pre-injection swabs, wound cleansing tissues, germ free tissues to

wipe spectacles and many more special purpose tissues for hospitals, pharmaceuticals, hotels,

airlines etc. Tainwala has forged an alliance with Samsonite Corp, USA, a world leader in

luggage industry and is also involved in making life more comfortable for people with jawan tuf

top quality, factories, warehouses etc.

COMMUNICATION STRATEGIES

They have also painted many PANWALA shops of Madhya Pradesh and Uttar Pradesh with their

CASPER mosquito coil brand. This gives them visibility for a period of 6 months. Numerous

numbers of people come to the shop and they notice the advertising. This helps them

encourage brand recall.

Their main means of promotion is advertising through Doordarshan. Their television ads

normally emphases on a good night sleep with your family. They basically try and emotionally

appeal the mothers, since they show a doting mother in the ads.

They provide large amount of promotion through word of mouth by giving larger margins to

distributors and retailers, in the rural market the word of these people makes an impact on the

buying decision of the people in rural areas.


Their aggressive advertising marketing includes:

Advertising in local newspaper.

Stressing in trade related activities.

Making mosquito mats machine available at electronic shops, painting shops for free

gifts.

They carry out product distribution through vans and educate the rural markets about

anti-mosquito solutions.

They also advertise in between various local events in the rural areas.

The use of local newspapers to advertise the product is widely used by many companies. The

various newspapers used by companies are

North:

Punjab Kesari, Amar Ujjala

East:

Anand Bazar Patrika, Dainik Jagran, Dainik Bartaman

South:

Enadu, Malayalam Manorama, Kumudum

West:

Loksatta, Tarun Bharat, Sakal, Sayakaleen, Shetkari (for farmers)

The company also use posters to a great extent in their promotions. They also do a lot of

advertising through stickers, danglers etc.

Also the companies use non-conventional sources of advetising like


Role-plays.

Wall paintings

Local bus back panels


9. CONCLUSION

Growing at an annual rate of 4% the rural market introduces 1.2 million consumers every year.

Rural consumer is no more looked upon as the distant cousin of the urban consumer by the

Indian corporates and multinationals. The rural customer has found his own place under the

sun. More and more villages are incorporated in the scheme of things as FMCG companies and

MNC’s scramble to woo the rural consumer.

As a result of the promotions drive launched by the agencies, most consumers have become

extremely brand conscious and loyal. No longer is every washing powder Surf and every bathing

soap Lux.

Promotions in rural areas need to be carried out very carefully as the people are very brand

loyal. It has been seen often enough that in one village only one brand is prevalent. This is not

due to lack of supply of other competing brands but simply because the brand entered the

market first. But the flip side of this is that if one brand turned out to be faulty in one

household, it would be boycotted by the whole village.

Carrying out promotions in rural India is no mean task. As technology has not been used

extensively to cover this market, it is the knowledge base that is more critical.

Rural people associate a brand image with what they think of themselves. Therefore, using

pictures of semi-nude women would amount to asking them to not use the product at all. The

rural communication strategy has to be very well planned and implemented and the rural

consumer’s sentiment has to be taken into consideration while planning and executing the

strategy.

Several other features need to be kept in mind for rural marketing. For one, the rural consumer

is extremely price conscious. For him, savings are critical and not product usage. Consequently

a discount would be more effective than an increase in the size of the product. Why and which

sachets achieve maximum usage in rural areas.

No.of People

Ads

Newspaper

Friends

Shopkeeper

Others


There used to be a time when foreign companies and MNC’s would give this market a pass

thinking their ‘sophisticated’ products would not sell there. Companies such as Reckitt and

Coleman, P&G, domestic FMCG Tata tea, Titan industries, pharma giants Ranbaxy and Glaxo

and innumerable electronic manufacturers like Videocon, Godrej, BPL, Samsung, LG and

automobile majors such as Ford, Toyota, Daewoo have suddenly discovered the hidden mass of

rural India. Most have launched brands suited to rural India and have gone aggressive in their

marketing and advertising strategies.

In the coming years, it may well be the rural consumer that accounts for most of an

organizations sale. With so much of activity in the rural sector, all one can say is “the rural

customer has arrived”.


10. REFERENCES

Books

Awadhesh Kumar, Pandey (2005), “Rural Marketing”, New Age International Publisher.

C.K. Prahalad (2005), “ The Fortune at the Bottom of the Pyramid”

Philip, Kotler (1999), “Marketing Management”, Prentice Hall of India.

Journal

A Sarangapani, T Mamatha (2008), “Rural Consumer Behavior with regard to selected

FMCGs Consumption patterns and brand usage” Brand Management, Vol. V (3), Sep.

2008, PP 22-61.

Website

www.ncaer.com

www.managementparadise.com

www.indianmba.com/faculitycolumn/articles

www.ruralmart.com

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