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A
DESSERTATION REPORT
ON
A study on the ruler marketing
Boom in India
Submitted in Partial fulfillment of Award of the Degree of Post Graduation diploma in management (2004- 2006)
UNDER THE GUIDANCE OF SUBMITTED BY
Mr. A.R. MISHRA Mirza Mohd Haider Faculty/ Mentor PGDM (05-07)I.T.S. Ghaziabad
Institute of Technology & ScienceMohan Nagar, Ghaziabad. 201007
(Affiliated to U.P. Technical University, Lucknow)
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Acknowledgement
The feeling of acknowledging something and expressing it in words are two
different things altogether. It is my weakness, but I honestly admit that when
we truly wish to express our warm gratitude and indebtness towards
somebody Concerned, I am always at a loss of words.
I gratefully take this opportunity to express my gratitude and indebtness to
my most able guide Mr.A.R.Mishra (Faculty) for his active interest, timely
encouragement, valuable suggestions and unceasing assistance and creative
criticism at every stage of this project.
Mirza Mohd Haider
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EXECUTIVE SUMMARY
Marketing today has completely transformed the nature and dynamics of business.
Marketing of products has taken precedence over the process of production itself.The
rural market is a significant part of our marketing strategy which enables us to help the
consumer link with our product. The main objective of the Dissertation is to through
light on scope of Rural Marketing in India. The Future growth potential in Indian Rural
marketing and Different strategies for competing in rural India was the area of study. It
will help in understanding the whole marketing strategy about Indian rural market.
It will also help in understanding, why Indian rural market is booming. Analyze the
opportunities & threads in Indian Rural marketing and work out different strategies for
competing in rural India.
The information is collected from secondary sources- Internet, books, magazines,
newspapers, and journals. The Rural markets have been a vital source of growth for most
companies. For a number of FMCG companies in the country, more than half their annual
sales come from the rural market. My research has attempted to explore the key
opportunities and challenges of marketing in rural India. In the hunt for fresh pastures,
the vast and hitherto vastly unexplored terrains of rural India consistently beckon the
moolah seeking marketer.
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To be successful, multinational consumer goods companies need to be innovative,
dogged and culturally sensitive in developing rural marketing strategies. It is a testament
to both multinational and local consumer goods companies that they have been able to
innovate and address the challenges offered by Indias rural market to bring goods, to and
improve the lives so many people
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INTRODUCTION
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INTRODUCTION
"The rural market is a significant part of our marketing strategy which enables us to
help the consumer link with our product."
While we all accept that the heart of India lives in its villages and the Indian rural market
with its vast size and demand base offers great opportunities to marketers, we tend to
conclude that the purse does not stay with them. Nothing can be far from truth. Rural
marketing involves addressing around 700 million potential consumers, over 40 per cent
of the Indian middle-class, and about half the country's disposable income. According to
a NCAER study the consuming class households in rural equals the number in urban. and
awareness The recent NCAER publication "The Great Indian Middle Class" further
reveals that the Indian middle class consisted on 10.7 million households or 57 million
individuals of which 36 per cent lived in rural areas. No wonder, the Rural markets have been a vital source of growth for most companies. For a number of FMCG companies in
the country, more than half their annual sales come from the rural market.
Although with the substantial improvement in purchasing power, increasing brand
consciousness, changing consumption pattern and rapid spread of communication
network rural India offers a plethora of opportunities all waiting to be harnessed, the
marketers lack the in-depth knowledge of the village psyche, strong distribution channels
and awareness that are indeed the prerequisites for making a dent into the rural market.
Moreover, vast cultural diversity and vastly varying rural demographics, poor
infrastructure - be it inadequate roads and highways or the availability of telephones and
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electricity, low income levels, low levels of literacy often tend to lower the presence of
the corporates in the rural markets.
Thus, although the rural markets must be alluring, tapping the vast potential calls for a
systematic psychographic analyses and an appropriate marketing mix to meet the
consequent challenges of availability, affordability, acceptability.
To achieve success, in rural India, companies will need to establish rural market
development programmes. There is a need to innovate and adapt products that suit rural
operating conditions. The rural consumers need to be educated of new concepts, relevant
to the environment and usage habits that will improve their quality of life.
In addition to focusing on targeted promotions and advertising there is an urgent need to
work on economical packaging, dual pricing and special sizes of FMCG and household
products. IT can be considered as an important marketing tool.
Moreover, the corporates need to place emphasis on retailers directly rather than
depending on the wholesalers for distribution in the rural market as this has not proved to
be very effective and a proactive marketing medium.
There is a need to generate superior data on rural marketing system, the haats, melas, and
mandis and on village and small town income levels and consumption patterns. They
need to learn how to use existing market places - haats, melas, and mandis - to arrange
live demonstrations of products. The ingredients for successful penetration into the hearts
and
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Wallets of village consumers include long-term commitment, cost re-engineering and
sustained innovation and specialized strategies.
I would like to mention that despite the hurdles that rural economy presents; corporate-
rural partnership can overcome these and bring about positive results for both the entities.
Partnership needs to extend beyond agribusiness. It is not only the FMCGs but also the
financial and insurance sector that needs to come forward. We are glad that today we
have senior representatives from the Banking and Insurance sector to discuss their
success stories and tailor-made financial products that have been introduced by them to
address the specific needs of the rural markets.
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RURAL MARKET ENVIRONMENT
The rural market environment need a separate examination as it varies significantly from
that of the urban market. We shall deal with the subject under the three headings :-
1. The rural consumer.
2. The rural demand.
3. Other aspects of the rural market environment.
(A)-THE RURAL CONSUMER: A Detailed Profile :-
Size of Rural Consumer Group
In numerical terms, Indias rural market is indeed a large one; it consists of more
than 740 million consumers. 73% of Indias total population is rural. The rural
market consists of more than 12 crore households, forming over 70%of the total
households in the country.
Characteristics of Rural Consumer Group
LOCATION PATTERN :-
Rural Market of India is a geographically scattered market. The rural
population is scattered across 5,70,000 villages. And, of them, only 6300
villages have a population of more than 5,000 each. More than 3 lakh villages
are in the category of 500 people or less.
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SOCIO-ECONOMIC POSITION :-
Rural Consumers continue to be marked by low per capita income/ low
purchasing power. Similarly, they continue to be a traditional -bound
community, with religion, culture and tradition strongly influencing their
consumption habits. Nearly 60% of rural income comes from agriculture.
Rural Prosperity and discretionary income with rural consumers are thus linked
to a sizeable extent with agricultural prosperity.
LITERACY LEVEL :-
Rural India has a literacy rate of 28% compared with 55% for the whole
country. The adult literacy programmes launched in the rural areas are bound to
enhance the rural literacy rates in the years to come . The rate is certainly on the
low side.
LIFESTYLE :-
The rural consumers are marked by a conservative and tradition-bound lifestyles.
But this lifestyle of a sizeable segment of rural consumers has already changed
significantly in recent years .The changes can be attributed to several factors
such as:
Growth in income and change in income distribution .
Growth in education.
Enlarged media reach (particularly television).
Growing interaction with urban communities.
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Marketers effort to reach out the rural market.
BUYING BEHAVIOUR :-
Buying behaviour of rural consumers has been effected by the following
factors:-
INFLUENCE OF CULTURE:-
Rural consumers perception of products are strongly influenced by cultural
Factors .For example-the preference in respect of colour, size and shape is
the result of cultural factors.
GEOGRAPHIC LOCATION:-
Rural consumer behaviour is also influenced by the geographical location of the
consumers. For example, nearness to feeder towns and industrial projects influenced
the buying behaviour of the consumers in respective cluster of villages.
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WAY THE CONSUMER USES THE PRODUCT
The situation in which the consumers utilize their the product also their buying
behaviour. For example Lack of electricity automatically increase the purchase of
batteries by rural consumers: since the rural consumers cannot use washing powders
/detergents powders that much, as they wash their clothes in streams .
Amazing innovator
With a queer psychology of purchase and usage, Indian rural market is still a puzzle to
marketers. In many a case, it stretches its imagination to find surprisingly different uses
of some of the products. And the red-faced marketers admit that they actually sell their
products in areas they would otherwise find difficult, simply because there are other uses
for them. For instance, in parts of Northern India, condoms are used by weavers as gloves
on their fingers to weave fine threads. Lubrication on condoms allows them fine control
on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale
are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage
to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to
make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to
paint the horns of cattle to make identification easier and to achieve a long-term
protection from theft. Iodex is rubbed into the skins of animals after a hard
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days work to relieve muscular pain. The organizations in question might not be pleased
with such usage. However, their moneybags keep on jingling.
Quality consciousness
It will be unjustified to think that rural consumers are less bothered about product quality.
Even the village buyers desire to buy a quality product and upgrade their quality of life.
Marico, an Indian edible oil company, has found the rural consumers in the interior of
India willingly pay a reasonable price premium for branded cooking oil, over community
oil, because they are certain of its consistent quality. Unbranded products are often
considered by some of them to be adulterated.
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OBJECTIVEOF
RESEARCH
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OBJECTIVE
The over all objective of the Dissertation is light on scope of Rural Marketing in India
To know the scope of rural marketing in India
Future growth potential in Indian Rural marketing
Different strategies for competing in rural India
opportunities & threads in Indian Rural marketing
Scope:
It will help in understanding the whole marketing strategy about Indian rural
market.
It will also help in understanding, why Indian rural market is booming.
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METHODOLOGY USED
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METHODOLOGY USED
In order to carry out any research investigation there is a need of a Systematic method
and to adopt a well defined procedure for each and every research there is also a need of
methodology . Methodology of any research constitutes the selection of representative
sample of the universe or the general population ,application of the appropriate
research tools and the techniques.
The research involves the following steps:-1. DEFINE THE PROBLEM AND RESEARCH OBJECTIVE:-
If the problem is clearly defined ,it is half solved .The problem
Objective here to assess the scope of rural marketing
2 - COLLECT THE INFORMATION :-
The information is collected from secondary sources- Internet, books,
magazines , newspapers , and journals
3- ANLAYZE THE INFORMATION :-
The next step in the marketing research process is to exact
findings from the collected data .
4-PRESENT THE FINDINGS AND CONCLUSIONS :-
As the last step ,the findings and conclusion of whole
research are presented . .
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INTERPRETATION
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CREATIVE RURAL MARKETING FOR RURAL INDIA
INTRODUCTION
Marketing today has completely transformed the nature and dynamics of business.
Marketing of products has taken precedence over the process of production itself. This
can be attributed to the fact that the new age consumer equipped with the potent tool of
information seeks more knowledge about the product, its features and its uses. And when
this information is presented in a creative and effective manner, it creates an everlasting
impression on the consumers mind and may even alter his perception of what he needs.
Marketers are forever seeking fresh challenges and scouting for more and more clientele
to be drawn into their sphere of influence. The urban consumer has always been
pampered with the most dazzling array of goods and services from every industry. Butthe urban market is fast shrinking due to saturation caused by the competition and the
growth rate over the past few years has consistently shown a declining trend. In the hunt
for fresh pastures, the vast and hitherto vastly unexplored terrains of rural India
consistently beckon the moolah seeking marketer.
Why go Rural?
There are various reasons why every industry is taking a very serious look at rural
markets
About 285 million live in urban India whereas 742 million reside in rural areas,
constituting 72% of Indias population resides in its 6, 00,000 villages.
The number of middle income and high income households in rural India is
expected to grow from 80 million to 111 million by 2007 while urban India is
expected to grow from 46 million to 59 million.
Size of rural market is estimated to be 42 million households and rural market
has been growing at five times the pace of the urban market
More government rural development initiatives.
Increasing agricultural productivity leading to growth of rural disposable income.
Lowering of difference between taste of urban and rural customers.
Many companies like Colgate-Palmolive, HLL, Godrej etc have already made forays
into rural households but still capturing the markets is a distant dream. Most
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marketers still lack in depth knowledge to analyze the complex rural market.
Characteristics of Rural markets
There are certain characteristics of rural India, which every prospective marketer
needs to be aware of before unleashing his product:
Low income influenced by seasonal fluctuations
Low literacy
Diverse customs, languages and social structures
Resistant to change
Price sensitive
High brand loyalty
Influenced by traditions
Moderate aspirational levels Quality Conscious
Low to moderate risk taking ability
These typical characteristics of the rural market make it evident that there are huge
challenges, which a marketer will face. These challenges need to be tackled using
appropriate strategies and proper planning. The major obstacles can be classified as
follows:
Poor infrastructure facilities, which hamper the effective distribution of
products and make the task of reaching the target consumer difficult.
Traditional media is ineffective due to illiteracy and non availability.
There is insufficient past research to provide some insight about consumer
behaviour.
Disposable income is highly dependent on good monsoons and a rich
harvest.
Varying linguistic and socio-cultural norms compel the marketer to vary
his marketing message for different parts of the same country.
Role of women in buying process is still not independent of family constraints.
Inadequate credit availability hampers the ability of rural retailers to carry
stocks.
Understanding the psyche of the rural consumer and gauging the complexity of the
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rural market has to be given utmost priority by marketer. Creative marketing
solutions need to be devised to combat these barriers.
Methods followed traditionally
Traditional methods of rural marketing make an interesting study and they ought to
be analyzed carefully to draw relevant conclusions. Conventionally marketers have
used the following tools to make rural inroads:
Use of few select rural distributors and retailers to stock their goods
but no direct interaction with prospective consumer.
Use of print media or radio but no alternate form of advertising for
promoting their brands
More focus on price of product but less attention devoted to quality or
durability Same product features for urban and rural setting with no
customization for rural areas despite differences in the market
environment.
Low frequency of marketing campaigns.
Little uses of village congregations like haats and melas to sell the
products.
More focus on men as decision makers and buyers.
Marketing in focus groups
To explain how the dynamics of branding works in different settings, let us take
example of four villages from various parts of the country. For our purpose we will
refer to these villages as our focus groups. We have taken a village each from Punjab,
Bihar, Kerala and West Bengal. As we have stressed earlier, for any product to be
successful in the rural parts of the country, a customized approach is necessary. So we
will start our analysis by describing the features of each village, define a product that
we wish to market in that village and then describe the marketing strategy for that
product.
FOR A VILLAGE IN PUNJAB
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There are various factors that need to be kept in mind so as to influence the buying
behaviour of the people of this village. Punjab has a rich culture and Punjabis are per
se very lively people. They believe in strong community relationships. Caste system
is not very strong and overall farmers are prosperous. Land is fertile and there is
abundant food and water. Literacy rates are almost equivalent to the countrys rate
and people are highly aware of the current trends and like to own goods that enhance
their status in the community. People are fond of eating and frequent celebrations are
part of their lives.
To understand how marketers need to approach this market, we have chosen an
electronic grill as the product. Traditionally a clay tandoor is used to cook chapattis,
non-vegetarian items etc in this region. We are offering electronic grill as a substituteto this. Characteristics that a marketer needs to highlight in this product are:
_ Modern way of cooking
_ A premium product, uses some imported technology
_ Control panel in Punjabi language
_ Smart looks, international styling
_ Faster cooking, heat controls and offers variety in terms of dishes that can be
cooked
_ Payment in easy installments
_ Convenient to handle and portable
_ Available in different sizes viz. 22 liters, 19 liters, 16 liters
In addition to using these promotional parameters, it has to be kept in mind that
disposable income is maximized during harvesting season so its the perfect time to
launch this product. Television and radio can be used to effectively promote the
product. In addition to this, demonstrations can be used to carry home the message.
As women are highly regarded in this region, so they can be roped in to educate the
local women about the benefits of using this product instead of traditional tandoor .
Also another way to promote this product can be to position it as a gift item during
marriages etc.
FOR A VILLAGE IN BIHAR
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Factors that need to be analyzed while entering this market are low level of literacy,
division of society based on economic background and caste system. There is no
dearth of water in this region and soil is also fertile. But there is lack of infrastructure
and modern industries. Rainfall levels are high. The law and order situation has
worsened in the recent past and the frequency of extremist violence has risen. The
people of Bihar are very religious and God-fearing. For recreational purposes, they
engage in folk theatre and enjoy music and dance.
To understand how marketers need to approach this market, we have chosen
multipurpose oil as the product. Characteristics that a marketer needs to highlight in
this product are:
_ Non- sticky quality of the oil
_ Contains herbal qualities _ Can be used for many purposes like hair massage, body massage and for
relieving stress
_ Special characteristics like cooling attributes
_ Available in variety of fragrances
As the income level in this part of the country is very low, so small and convenient
packaging is very important. Moreover to help them to relate to this product,
impression of their local Madhubani painting can be used on sachets or bottles. Also
the product name has to be traditional to which villagers can relate to for example
madhusudan or sanjivini. For promoting the product , some movie star should be used
as villagers aspire to be like them and thus emulate them.
FOR A VILLAGE IN KERALA
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A typical village of West Bengal has characteristics like low amount of agriculture,
coastal areas with fishing being the major source of income for the locals, generally
people are poor and land holdings are very small, literacy rates are very low. Staple
diet is rice and fish. People are very proud of their language and culture. We have chosen
dairy whitener as the product to demonstrate the approach that a marketer needs to take to
make inroads in this type of market. The main brand promise that is offered to the
consumer is low pricing and economy of the product Cost of milk in a cup of tea is
around Re 1. But a 50 gm sachet, which is priced at nearly Rs 6.50, can be used to make
nearly 25 cups of tea. So cost of milk used comes down drastically to nearly 26 paise per
cup. Moreover sachet offers convenience of use and can be used anywhere. As there is
high degree of humidity in that region and people cannot afford refrigerators, so this product helps to eliminate the problem of proper storage.
Analysis & Opportunities
As it is clear from the examples taken, for the product to be successful in rural
market, it has to be customized for that particular market. Each product needs
individual attention and success in one market cannot be emulated in other markets.
Most important factors that work for a product are right brand promise that is relevant
for the local population and discreet brand visualization. Brand visualization would
include factors like name of the product in local language, color combination
according to local settings and a tag line, which delivers the message that is easily
understood by the people. Companies need to identify the opinion leader in each area
and target him as the first point of contact for villagers. One potential area that
companies need to tap is advertising the local events like bullock races, melas or
festivals. Another way is to advertise in places where people commune like hand
pumps, ponds or haats .
Innovative uses of products
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Time and again it has been proved that whatever may be the level of research
involved in the market study, rural consumers behave in the manner that is totally
unpredictable. They devise such innovative uses of a product that even surprises the
companies. Some of the following examples will support this are:
_ In a village of northern India, weavers used condoms to cover their fingers
while weaving. This not only helped to avoid cuts on the fingers but also the
lubricant helped in easy movement of the thread between the fingers.
_ Godrej hair dyes are used in some villages to dye the buffaloes. This made
them look younger and thus fetched better price at the cattle fairs.
_ Horlicks was added to the feed of the cattle to fatten them and thus improve
the milk producing capacity.
_ Asian paints found that in some villages paints were used to color the hornsof the cattle for easy recognition.
_ In the villages of Bihar, Iodex was used on the tired limbs of the cattle,
returning from the fields in the evening so that they are fresh the next day.
All these examples show the there is tremendous potential for the existing products in
the rural areas, and companies need to look beyond the obvious and critically analyse
every indication that rural markets give, be it poor sales or high sales volumes.
Future Outlook
Considering the magnitude of the task at hand with the companies, it makes sense for
non-competitive companies like HLL and LG to make a joint effort to penetrate the
market. They can use each others distribution channels to leverage their brands. Also
considering the poor awareness levels of the people, competitors like HLL and P&G
should join hands to avoid the product proliferation, which results in confusing the
consumer. Rural consumers have a very high level of ethos so all the care should be
taken not to hurt them in any form of advertising. Moreover every effort should be
made by the companies to promote the my brand feel in the minds of consumers.
This can be achieved by connecting the local industries of that place and if possible,
Cracking the Rural Market in India
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To a marketer, India's rural market presents a challenge like no other. While marketers
salivate at the prospect of making their marketing millions in rural India, none has yet
been able to understand what makes rural India tick. Harish Bijoor says that so far
marketers have sought to thrust cornflakes and dog biscuits alike at rural Indians. He
makes a plea to preserve the sanctity of Rural India and discover commerce and sense in
it all - by creating brands that keep in mind rural imperatives. The rural market for brands
is a powder keg of an opportunity waiting to be explored - not exploited!
I spent the first four years of my career entirely in rural markets. I used every mode of
travel to enter into the gut and gore of the slice of market I had the privilege to look after.
The bullock-cart, the camel-driven cart and the boat were all means to penetrate a terrain
no MBA in his right mind wanted to. Dirty rat-infested lodges, police-raids that had me
ashamed of my neighbours in the rooms around and food that had me running to the
nearby field even in broad daylight are tales my early life in the rough and tumble of
Indian marketing is made of. These four years taught me one thing clearly! There are two
Indias! Real India and Virtual India!Real India was this piece of terrain I sold tea, coffee,
spices and condoms to. It was a big chunk of the land mass. It occupies bulk of the
landmass and houses 742 million people as of now! It is populous, multi-cultural and
multi-faceted. India started here. This is the residence of the arts, the culture, the food, the
ethnic fashion, the agricultural practice, the nuance of language and diction and
everything else that we in Urban India have morphed to our needs as of today.
Remember, in the very beginning there was no urban at all! It was all rural! All real!
Virtual India was where I came from. Virtual India was where I was shaped into a being
capable of commercial, social and cultural existence. The size of pie of land I came from
was an urban island of sorts. An aberration even! The populace that lives here
compriseda fourth of the size of the population of India on the whole.
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There sure was a Matrix at play! While politics of the nation was governed largely by
what Real India had to say, government policy did not necessarily tread the very same
path. There was this huge gap in understanding what was right for the masses and what
was politically expedient. In the bargain, policy was hijacked by the politician. While
politics was the domain of the politician and the bureaucrat that ran the nation in many
ways, commerce was largely played in the very same way. Till the wave of liberalization
set in. And when this happened, Indian businesses actually steered Virtual India. Whats
more, Virtual India took charge of the way Real India was to be run as well.
And in Virtual India, the businesses that dictate the soap that needs to be placed in your
toilet and the detergent in your bathroom and the cooking gas in your kitchen, actually
ran Real India. Real India is today run by Virtual India. The largest part of land-mass and
the larger part of the population base is controlled in many-many ways by the way the
urban man in urban India wants it run. A true blue hegemony of the Urban Indian!
Remember again that all marketing men and their kin in advertising, market research and
branding are mostly urban souls. Many in disguise as well! Real India (read as: rural
India henceforth) is fast morphing to the needs, wants, desires and aspirations discovered
by the urban man. Television as a medium has created awareness, a raging interest in
brands, a latent desire to consume and possess what is shown on the not-such-an-idiot-
after all-box! Television has spurred on consumptive action and has acted as a brand
consumption catalyst in many ways. And television has continually shown us images that
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make everything Urban desirable and everything Rural as something that is basic.too
basic!
Look keenly at the statistics that tell us the growth of urbanisation. In 1951 we had 2,843
Urban Agglomerations(UA) and towns. Today, the number is close to 4000! The Urban
population in 1951 stood at 17.3 per cent of total. Today, the number is a proud and
unidimensional 27.8 per cent! In the last fifty years, we have had what I would call
creeping urbanisation. In the next fifty, it is time to expect a galloping rate! Thanks to
televisionand thanks fundamentally to the Brand movement, which is poised to make a big movement in the heart and hearth of the rural dweller! The two Indias mean two sets
of peoples. The rural man, woman, child, dog and cat for a start! Remember, dog-food
and cat-food companies will definitely
want to invade the vast rural hinterland
sometime in the future for sure!
How then does one go about creating
brands for the rural person in the rural
dwelling? There are two ways really.
The first is the insensitive way most
marketers
have adopted to date. The second is a more sensitive rendering of what marketers and
brand-evangelists in the future could adopt. The first is really the easy way. Pioneer
marketers in rural areas used it to good advantage. Take the urban brand,
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multi-variable format. But why? Is this a return to socialism? A form of retro-appeal? Of
retro-fashion? No, the logic is strong enough for us to pursue the new rules of branding
for rural India.
For one, take the case of the fertilizer and pesticide situation. In the very beginning, all of
India was organic. We grew everything we did to cater to a population size that was
manageable without the use of pesticides and fertilizers. Natural organic manure and very
innovative natural practices that used plant and animal waste distinguished the
agricultural practices of India. And then came the revolution everyone wanted. The menin the Gandhi caps (except Gandhiji of course) wanted a bigger yield from the land and
the cow and the factory alike. Practices morphed and India became yet another dumping
ground for the pesticide and fertiliser that came from far and near. The countryside
morphed. Yields doubled.
The year is 2003! The world is discovering health and the joy of consuming the organic
produce. Its back to naturethe pure way! And India has lost it! Imagine a situation
where India could emerge as a 100 per cent producer of the organic product! And
remember still that the organic produce today commands a premium in the key
consumption markets of the world! We lost it! The rural terrain we still boast of can be
preserved. I seek a sensitivity among the marketing man. A sensitivity that promises not
to harm commercial intent, which is the salient driving force of all business intent.
Sensitivity that could well carve out for the marketing man a commercial space one can
be truly proud of.
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The case I present in this piece therefore, is a case that seeks to preserve the sanctity of
Rural India and discover commerce and sense in it all! A plea to really stop this one-sided
movement that seeks to make the rural man a consumptive animal of cornflake and dog
biscuit alike! Create brands keeping in mind rural imperatives then. Here goes the ideal
E - MARKETING IN RURAL INDIA
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Abstract
Modern information and communications technologies (ICTs) and web based marketing
of agricultural produce hold great promise for the socio-economic development of rural
hinterlands in India. However, if they are to serve the `unserved and spawn innovation
at grass root level their implementation must be carefully localised. This paper explores
several models of ICT deployment and information design issues which have been tried
in various parts of the developing world in the context of agricultural marketing over the
web and uses that learning with field experience from a live project. The flexible systems
framework is found appropriate and useful to design the next action agenda.
The anytime-anywhere advantage of e marketing leads to efficient price discovery and
offers economy of transaction for agricultural trading. This attracts many rural
developmental agencies to deploy websites for marketing agricultural produce. But in
spite of a core value proposition and significant investment by the Indian
government/NGOs and commercial agencies in developing such portals, many have
failed. Internet traffic on these websites is either very limited or none at all. Yet there is a
lack of empirical studies on the modes of their failures.
This study using the SAP-LAP methodology examines the experiences of a number of
internet portals from India and other countries engaged in rural marketing or
disseminating rural development information, with usability measures derived from
farmers and traders and those suggested by researchers. The findings are used in
developing a conceptual framework for e-marketing info design for agricultural market in
rural northern India for the portal (DM).
Situation
Common wisdom has it that the advent of modern information and communication
technologies (ICTs) such as telephony or the internet hold unprecedented opportunities
for rural development. Researchers, policymakers and entrepreneurs alike frequently
claim that ICTs represent one of the most powerful tools in the struggle against poverty.
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The significance of the Web in disseminating information and communicating this
effectively to the targeted user has been sufficiently debated. Most experts agree to it that
the Web will have a great impact on the way rural marketing would be conducted in the
future, yet there has been little research towards exploring the effectiveness of the
provision of agriculture-related and rural marketing information in the electronic form.
This study set out to assess the current performance of agricultural websites in some key
areas of information provision through such websites maintained by government
departments and agencies, private profit-motivated as well as non-governmental
organizations (NGOs), and to identify the barriers to communication. The results offer
significant implications for researchers and practitioners interested in development of
portal information structure for Web development, multi-dimensional communication,electronic commerce networks and e-commerce trading platforms for rural marketing.
There are a number of ways some obvious and some not-so-obvious ones in which
ICTs may serve the development process. For instance rural entrepreneurs can benefit
because ICTs help to improve access to markets or supply chains and provide a broader
base for decision-making, thus making risk more calculable. Moreover, many local
communities have experienced that ICTs have increased bottom-up participation in the
governance processes and may expand the reach and accessibility of government servicesand public infrastructure. In Andhra Pradesh, Internet-based Integrated Citizen Service
Centres allow for electronic bill payment, issuing of certificates, permits and licenses; or
access to public information. The electronic village project of M.S.Swaminathan
Research Foundation (MSSRF) in Pondicherry received the Stockholm award for its
promise.
However, there is as yet little systematic empirical evidence of the supposed enormous
developmental impacts of ICTs. Moreover, in many especially rural areas, the private sector is yet to invest significantly in ICT experiments (except for a few like ITC
or Tata Chemicals) because of lack of experience with rural markets or low purchasing
power of the local population. This means that, if ICT access is to be expanded, public
money will have to be spent which in turn means that there are important trade-offs to
be considered. In many areas, there are serious questions about how much money
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policymakers should spare for the build-up of ICTs instead of investing further in potable
water supply, roads, electricity or other physical infrastructure projects.
Given such trade-offs, there is a need to identify which kinds of ICT access deliver the
best value for money, and how the limited resources that can be spent on it can be madeto best suit the particular needs of rural India. A number of `models have so far been
tried.
One of the most famous projects of successful ICT application for development is the
Grameen Village Phone system, undertaken by Grameen Telecom (a member of the
Grameen Group). The project aims at ultimately spreading phone access to the over 100
million inhabitants of Bangladesh who are so far unwired, made possible by combining
the Grameen Banks expertise in village-based micro-enterprise and micro-credit with the
latest digital wireless technology. The aim is to have selected member borrowers of
Grameen Bank purchase the phones under a lease programme and make the phones
available to all users in the village on a fee-paying basis.
Another model of ICT provision in rural areas of developing countries, and one which
attempts to combine phone access with access to the Internet is that of the so-called
Telecentres or Information Kiosks or the recently introduced Infothela of MLAKLH. An
Infothela is a common point of access for multiple users (often an entire community),
providing a range of ICT services including Internet, fax, phone, e-mail, word processing,
and even specialised information retrieval or applications (e.g. distance education or
matrimonial matchmaking).
Telecentres have been established widely in the developing world, and vary in their
service provision and means of funding. In Peru, the establishment of numerous `Cabaas
Pblicas created one of the highest concentrations of public internet access and a
significant reduction in prices. Nevertheless, the experience with telecentres has so far
been a mixed one. In numerous cases, usage, particularly of PCs, has been lower than
expected or commercial viability was not attained. Of the over 70 Community
Telecentres established since 1997 by the South African Universal Services Agency, only
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40 per cent remain open today, with only 3 per cent making enough money to cover
costs.
Buried at the end of the World Bank policy paper on the Networking revolution:
opportunities and challenges for developing countries ( June, 2000) is an account of multipurpose community telecentres (MCTs) in rural Mexico. It turns out that of twenty-
three MCTs built in rural Mexico, only five were working two years later. This is a
failure rate of 80 percent.
The policy paper comments, Problems encountered included insufficient maintenance
funding, inadequate political interest and will, and cultural constraints which hamper
community interest in the projects. The paper gives no hint why political interest and
will might have been inadequate and why community interest might have been
constrained by that holdall excuse for failure, culture.
The paper concludes that the Mexican case underscores the importance of participatory
design and attention to sustainability issues in the development of such programs.
Actor
Internet and Information Kiosks exist in various kinds, each with their respective merits.
First, one might distinguish between the small private sector cyber cafes on the one hand
and bigger, donor-funded telecentres like e-Seva in Andhra Pradesh or e-Village in
Pondicherry on the other hand. Smaller, privately run cyber cafes are often financially
self-sustaining but are thus usually restricted to areas where they expect to be viable
(usually urban centers) and are usually neither within physical nor financial reach of the
poor. They are also unlikely to be able to provide local content. By contrast, larger,
often externally funded telecentres are rarely financially sustainable but can focus more
on specific development aspects, including access specifically targeted at ruralcommunities and the poorest in general, as well as a focus on training.
A second distinction is according to the institutional context they are embedded in. This
often has a significant influence on the developmental impact of telecentres.
Commercial telecentres and commercial franchises (like e-choupals of ITC) are usually
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closest to commercial viability but, as mentioned, are unlikely to have an impact on the
poor outside the economic circle of the e-Choupals. Telecentres run by or with the
involvement of developmental NGOs are more likely to target poor and marginalised
communities and focus on much-needed additional services like training, content
creation, provision of public goods without which ICT access would be of limited
developmental use. Telecentres in village schools for example as another alternative have
the significant advantage that for their establishment an existing physical infrastructure
only has to be extended and some of the ICT-relevant training can be cost-effectively
integrated into the mainstream curriculum of the educational institution. This partnership
has successfully worked in the DM project.
One further idea for the Digital Mandi that evolved was Virtual Telephones or village
voice mail systems, as have been set up in Brazil. These can provide individuals with
their own telephone number and access to a voice mailbox. In other words, the individual
need not possess a telephone but can receive calls to a voice mailbox using his/her
personal PIN. Extending this idea to text e-mail access, a South African company assigns
e-mail addresses to every Post Office box address in the country, thereby providing
electronic mail indirectly to around eight million South African households through
public internet terminals located in post offices which users can access with a personal
identification number. The Postal Department in India has now taken up a similar programme. .
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Thus there are a number of alternatives and apparently mutually exclusive business
models for ICT implementation in Rural India.
On one hand it appears that kiosks run by local entrepreneurs with localized and targeted
applications (like e choupals in Northern India or voicemail service in Brazil or matrimonial matchmaking service in Tamil Nadu) will succeed on the other hand
following the success model of the world wide web itself one may suggest that if an
infrastructure is created and user friendly appropriate interfaces are continuously
accessible then local rural folks will develop their own applications and Information
Kiosks or Infothela will survive.
The Digital Mandi Project conceived as an electronic trading platform for agro-
commodities of Northern India and meant to run as a core application on the mobileInfothela faced additional problems.
Barriers to information access may be physical, economic, intellectual or technological,
that impede a users participation in the activities on a website. The barriers may be
actively imposed by the architects and website designers or they may be allowed to
continue simply through their lack of action or lack of understanding of the critical user
conditions. Such critical user conditions may arise due to particular demographic,
geographic, cultural, social, psychological, economic or other factors. Issues related to
usability such as ease of use, usefulness (Davis, 1989), decision effectiveness (Mason et
al, 1973), user response, user satisfaction (Doll et al, 1988) and many other aspect of
usability have been studied in great detail by researchers. But interactions with focus
groups at various agricultural market places around Lucknow-Kanpur showed the need of
a more detailed study on Information communication barriers on a more localised set of
priorities.
Learning
A general framework for web design keeping in mind the human-computer interaction
theories (Pirolli, 2001), web site usability principles (Huang, 2003), information intensity
paradigm (Palmer and Griffith, 1998), e-customization models (Ansari and Mela, 2003)
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and heuristic evaluation models (Agarwal and Venkatesh, 2003) is already in place and is
assumed to sufficiently address the question of defining broad guidelines for designing
any successful website. It is therefore, assumed that a website with relatively high-level
of accurate, up-to-date and pertinent content, deployed in a user-friendly way, customized
to particular user groups, and tailored to specific geographical needs should be
universally successful and hence, accepted in India too. However many such efforts have
apparently failed to achieve their targets.
The challenges to agricultural website usability for rural marketing in India arise mainly
because of the highly specific local needs and the great diversity in local conditions. The
major challenges are
Poor literacy rate low use of textual information
Remote village locations - physical distances compounding problems of
lack of proper price information and habitual dependence on middlemen.
Absence of alternate media for dissemination of info.
Absence of info in vernacular languages and multiplicity of languages.
Cash crunch of farmers, immediate cash transaction system and reluctance
of banks to provide soft loans to farmers. Economic, low-cost solutions - any technology solution aimed at
benefiting the masses in rural India must be affordable and low-cost so
that the perceived economic benefits of such an endeavor are much more
than the cost of switching over to a different technological solution.
In the absence of timely and correct information about prices, arrivals and market trends,
compounded with the problems of low cash-at-hand and proper advice, farmers areforced to sell their produce at lower-than-expected rates. The result is that the benefits of
the green revolution have not really percolated down to the farmers.
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Action
The Digital Mandi project demonstrates that there are a number of features pertaining to
the ICT access projects that are particularly successful from a developmental viewpointThis means, for instance, to somehow convey the relevant (local) content provided
through internet access to the largely illiterate rural populations of developing countries
in local language may have far- reaching spin-offs.
A model that inspired the Mandi team was The Kothmale Community Radio in Sri
Lanka. This project has combined community radio and Internet access. It has a leased
line connection to the Internet, and in the so-called process of radio browsing
programme presenters browse the Web in the studio on behalf of listeners (who provide
requests/input through phone or post). Relevant experts from the community then
interpret the information for listeners. Another good example of the creation of relevant
local content are the Infoshops in Pondicherry, India. After information requirements
are identified during a trial period, volunteers from the village create a local database
comprising government programs for low income rural families; cost and availability of
farming inputs such as seeds and fertilisers, grain prices in different local markets; a
directory of insurance plans for crops and families; pest managements plans for rice and
sugar cane; a directory of local hospitals, medical practitioners and their specialties; a
regional timetable for buses and trains; a directory of local veterinarians, cattle and
animal husbandry programs. All these preceding experiments contributed to the Digital
Mandi design.
Web site success depends on a number of factors the most important of which is the
website design, which encompasses both the content creation and information design.
All website design issues aim at providing certain requisite features in the website.Jonathan Palmer (see references) has contented that website success depends on such
factors as website download delays, navigation, content, interactivity and responsiveness.
The inclusion of these features into a good website can be addressed as (a) content-
related issues, (b) information design issues and (c) communication design issues.
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Traditionally, the basic work of a good website design has been considered as addressing
the content-creation and context-appropriateness issues only. While website designing
objectives for other purposes may be fulfilled by creating a good fusion of relatively
high-level content with fine design features taking care of the issues mentioned above,
they would certainly fall behind their objectives when considering agricultural websites
for rural marketing. The reasons as has been listed earlier, can be found in the inherent
characteristics of rural markets in India. These websites are therefore bound to fail unless
delivery services for agricultural information can be effectively integrated with good
information design models and grass root innovators/ social activists agenda.
Performance
The basic findings from our initial research at Digital Mandi has shown that the presence
of a number of desired features in a website leads to higher user satisfaction. Such
features are broadly aimed at satisfying one or the other of the following immediate user
objectives:
a) Ease of access.
b) Up-to-date content.
c) Layout, design, consistent themes.
d) Easy navigation.
e) Higher interactivity.
f) Access through multiple media.
g) Higher use of non-textual information.
h) Multiple languages.
i) Lower cost of transaction.
It was assumed that each of these factors contributed to higher user satisfaction.
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The Digital Mandi project now wants to integrate an ethnographic approach with flexible
systems methodology to focus on the communication design issues for web-portals
specifically devoted to rural marketing in India. The specific research questions are:
1. What are the major information design features for rural marketing in India?
Hypotheses (a), (b), (c), (d) and (e) are tested to find answer to this question.
2. What are the major communication media tools to be used for agricultural
websites in India? Hypothesis (f) is tested against this question.
3. What are the modes employed to transcend communication and cost barriers for
specific user groups?
What local language solutions are to be provided through which
media?
What non-textual solutions can be provided for the under-
educated, untrained user?
What makes ICT relevant for the unserved rural communities?
Hypotheses (g), (h) and (i) are being tested against this group of questions.
Conclusion
The general results of this study are presented in a tabular form. The list is not
exhaustive but can be assumed to be a representative sample of the most-widely used or
known (by search engines) for rural marketing and the general responses of researchers.
The basic website layout varies from the single-page, no partition, no frames approach
to the four-partitions (a top main menu, a left/right lower-level menu, a bottom links bar
and a central space) approach which is also the most-widely accepted layout in the
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corporate websites (Huang, 2003). More than 50% of the websites provide up-to-date
content. A website worth mentioning is www.agmarknet.nic.in, a government-promoted
STRATEGIC ISSUES: A PEEK INTO THE RURAL MARKET
Here the rain gods still play havoc with ones dreams. The dusty village path winds past a
cluster of slumbering cottages and leads one to a weekly rural bazaar or haat, brimming
over with din, bustle and transaction. This is where the real India resides. Telephone is a
luxury here. Electricity, if at all, comes here only in fits and starts. And a delivery by road
may take any stretch of time.
However, things are changing fast now. Thanks to the increasing literacy level and media
explosion, people are becoming conscious about their lifestyles and about their rights to
live a better life. Brand consciousness is on the rise. This, clubbed with increasing
disposable income of rural households, has made the rural consumer more demanding
and choosier in his purchase behaviour than ever before. And the dusky village damsel
has now learned to pine for a satin rose .
The rural India offers a tremendous market potential. A mere one percent increase in
Indias rural income translates to a mind-boggling Rs 10,000 crore of buying power.
Nearly two-thirds of all middle-income households in the country are in rural India. And
close to half of Indias buying potential lies in its villages. Thus for the countrys
marketers, small and big, rural reach is on the rise and is fast becoming their most
important route to growth. Realizing this Corporate India is now investing a sizeablechunk of its marketing budget to target the rural consumers.
Increasing brand awareness
In the rural families, studies indicate a slow but determined shift in the use of categories.
There is a r Increasing brand awareness
In the rural families, studies indicate a slow but determined shift in the use of categories.
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There is a remarkable improvement in the form of products used. For instance,
households are upgrading from indigenous teeth-cleaning ingredients to tooth powder and
tooth-pastes, from traditional mosquito repellant to coils and mats. There is also a visible
shift from local and unbranded products to national brands. From low-priced brands to
premium brands.
FMCG CONSUMPTION
Organizations like Hindustan Lever Ltd., Nirma Chemical Works, Colgate Palmolive,
Parle foods and Malhotra Marketing have carved inroads into the heart of rural markets.
Various categories of products have been able to spread their tentacles deep into the rural
market and achieved significant recognition in the country households. And, in the
process, the regional brands, local brands and the other unbranded offerings got displaced
by the leading brands.
Company Household penetrationHLL
Nirma ChemicalCompany Household penetration
HLL
Nirma Chemical Works
Colgate Palmolive
Parle Foods
Malhotra marketing
88%
56%
33%
31%
27%
Category% volume of local
brands/unbrandedWashing cakes/bars
Tea
Salt
88
56
33
Of the expenditure on consumer goods in rural household, approximately, 44% is on food
articles such as biscuits, tea, coffee and salt, 20% on toiletries, 13% on washing material,
10% on cosmetics, 4% on OTC products and 9% on other consumables. A number of
category products have established themselves firmly in the rural households.
It is evident that in the villages low-priced brands are well accepted and one might feel
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that a larger proportion of the purchases made in rural market can be attributed to local/
unbranded players. Surprisingly, however, the unbranded/local component contributes to
a substantial portion of the volume of only a few of the highly penetrated categories.
Focus on urban categories
CategoryCategory
Penetration
Brand with highest
penetrationToilet Soap
Washing cakes/Bars
Edible oil
Tea
Washin powder / liquid
Salt
Biscuits
91%
88%
84%
77%70%
64%
61%
Lifebuoy
Wheel
Double iran mustard
Lipton Taaza Nirma
Tata Salt
Parle G
Though the commodity products have greater penetration, traditionally urban categories
such as skin creams and talcum powder have also made a mark. While the urban talcum
powder market suffered a de-growth, the rural talcum powder market darted ahead.
Similarly, growth of rural skin cream market was at par with that of urban skin cream
market. This clearly indicated that after being considered urban for a long time, some
categories are now wearing a rural face. And, in many a case, it is the rural market that is
actually driving the growth of category.
Premium brands
Ponds is the leader in the talcum powder category with a penetration of 65% and volume
contribution of 56%. Its rivals viz. Nycil and Liril are trailing far behind. Moreover, 60%
of the Ponds users have purchased no other brand i.e. they are 100% brand loyal. This
reflects the strength of the brand in rural bazaar.
Category Household Penetration
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Skin creams
Talcum Powders
18%
15%
In the skin care category, Fair & Lovely fairness cream, with a penetration of 75%,
accounts for 60% of the skin care market in rural India. It also enjoys the undistinguished
patronage of 58% of its user households. Both Ponds and Fair & Lovely are enjoying a
monopoly in the rural markets in their respective categories.
Rural India is not averse to trying out the premium brands at high prices. A study
indicated that a majority of the premium brand users are using the brand for the first time.
Similarly 0.9% of the talcum powder-using families have started using Denim talc and
0.7% of the shampoo using households started using Pantene. Surveys also reveal that
trials are not restricted to the more affluent echelon of the villages. The experimenting
households are more-or-less evenly spread across the various socio-economic clusters of
the rural market. This should further encourage the marketers to focus their attention on
rural buyers.
Brand Penetration of category usersSurf
Ariel
Pantene
Denim
6.2%
4.5%
1.8%
1.8%
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The rural youths are more open to fresh concepts as against their elderly family members.
Their difference in choice of products/brands with the seniors of the households often
leads to a dual-usage of product categories. As an instance, 20% of the households
using tooth powder also use tooth paste. Similarly, many of the households using premium brands also use mass market brands. For example, while 15% of Surf and 12%
of Ariel using families also use Nirma detergent, 3% of Denim users use Ponds
Dreamflower talc and 18% of Pantene using households use Clinic shampoo as well.
AMAZING INNOVATOR
With a queer psychology of purchase and usage, Indian rural market is still a puzzle tomarketers. In many a case, it stretches its imagination to find surprisingly different uses
of some of the products. And the red-faced marketers admit that they actually sell their
products in areas they would otherwise find difficult, simply because there are other uses
for them. For instance, in parts of Northern India, condoms are used by weavers as gloves
on their fingers to weave fine threads. Lubrication on condoms allows them fine control
on threads and protects their sensitive fingers. Buffaloes displayed at the haats for sale
are dyed an immaculate black with Godrej hair dye. Horlicks is used as a health beverage
to fatten up cattle in Bihar. In villages of Punjab, washing machines are being used to
make frothy lassi in bulk. Paints meant for colouring up the rich-smooth walls are used to
paint the horns of cattle to make identification easier and to achieve a long-term
protection from theft. Iodex is rubbed into the skins of animals after a hard days work to
relieve muscular pain. The organizations in question might not be pleased with such usag
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POWER BRANDS, THE NEW FMCG MANTRA
"The power brands strategy has worked very well for us." Adi Godrej, chairman, Godrej
group.
"With the implementation of the power brands strategy almost complete, we have shown
both topline and bottomline growth in this quarter." D Sundaram, finance director,
Hindustan Lever Limited, after announcing Q3 2005 results."We benefited by dropping brands with low profit margins or moving out of categories
that were not growing." Harsh Mariwala, chairman and managing director, Marico
Industries.
Three men, one voice. Indian fast moving consumer goods companies like HLL, Godrej
Consumer Products Limited and Marico Industries are completely sold on the concept of
"power brands". But in their rush to put their best brands forward, are these big
companies in danger of overlooking the potential offered by some of the also-ran brands?
It's been almost five years since these three FMCG giants opted to manage their brand
portfolios on the basis of the power brand strategy. How have they fared? And what does
the future hold?
Why power brands?
In 2001, HLL decided to put its marketing resources behind 30 power brands out of a
bouquet of 110. Of these select brands, the top five brands of the company contributed
more than Rs 3,000 crore (Rs 30 billion) to the company's turnover (close to 30 per cent
of sales). So what did it take to be a power brand? In a nutshell - size, brand strength,
uniqueness and growth potential. The thinking in HLL? Helping brands grow under the
prevailing market conditions required scale.
Even in 2001, the Indian FMCG market was crowded. More than 3,000 advertisements
were beamed on television every month, while stock-keeping units at retail outlets had
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increased by over 40 per cent, in just three years. Unfortunately, for the most part, shop
sizes remained the same. Which meant in-store displays - critical for impulse purchases -
suffered. Even the plethora of television commercials wasn't helping the FMCG cause: it
was difficult for brands to stand out amidst the clutter.
For others like Marico, GCPL or Dabur, too, "getting more from fewer brands" became
the magic mantra. In 2002, GCPL decided to focus on five brands in a bid to sustain
growth; since these five contributed more than 90 per cent of the company's total sales,
that strategy made eminent sense. Around the same time, Marico decided to exit from
slow-growth, low margin sectors such as Sweekar edible oil and Sil jams. Instead, it
chose to stick with brands like Parachute, Saffola and Hair & Care. Was the approach
correct? Arindam Banerjee, professor and chairman, marketing area, Indian Institute of
Management, Ahmedabad, agrees cautiously. "Power branding counters brand dilution by allocating organisation resources on lesser but more secured marketing investments,"
he explains. Adi Godrej is more emphatic. "[Power branding] is not to prevent dilution of
brand, but to prevent dilution of the company's focus. If a company has 10 brands and
tries to support all of them, focus on the important brands would be diluted."
Top to bottom
Has it worked out quite the way these companies anticipated? Global marketing experts
aren't too bullish about a power brands strategy's impact on the balance sheet.
"Power brands will have an impact on the bottomline of companies, but not necessarily
on the topline growth," says Nirmalya Kumar, director, centre for marketing, and co-
director, Aditya V Birla India Centre, at London Business School.
Jagdish Sheth, Charles H Kellstadt Professor of Marketing, Goizueta Business School,
has a slightly different viewpoint. "You may have problems in the short run, but these can
be ironed out in the long run. Introducing brand variants will help."
Consider some numbers. Between 2001-02 and 2004-05, profits at GCPL increased 19.66
per cent, from Rs 41.98 crore (Rs 419.8 million) to Rs 86.07 crore (Rs 860.7 million).
Over the same period, turnover went up less than 4 per cent, from Rs 520.47 crore (Rs
5.2 billion) to Rs 603.46 crore (Rs 6.03 billion).
"This is clearly unsustainable," says an analyst. In sharp contrast, Marico has shown
significant hikes in both turnover and profit from 2002 to 2005. While sales climbed from
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Rs 671.08 crore (Rs 6.71 billion) to Rs 953 crore (Rs 9.53 billion), profits increased from
Rs 49.32 crore (Rs 493.2 million) to Rs 73.79 crore (Rs 737.9 million).
For its part, HLL has been plagued by flat or declining growth for some time now.
Between 2001 and 2004, profits plunged more than 22 per cent {Rs 341 crore (Rs 3.41
billion)}, while turnover dropped by Rs 892 crore (Rs 8.92 billion).
The troubles magnify when specific categories are considered. Toilet soaps, for instance,
contributed 24 per cent of HLL's sales in 2004, with sales value increasing marginally
from Rs 2,089 crore (Rs 20.89 billion) to Rs 2,380 crore (Rs 23.8 billion). But sales
volumes had actually declined, from 384,000 tonnes in 2001 to 368,000 tonnes,
indicating that the growth was mainly on the back of price hikes.
The story was repeated in reverse in the detergents sector, where HLL had three power
brands (Surf, Rin and Wheel). Sales volumes increased from 892,000 tonnes to 930,000tonnes, but sales value crashed from Rs 1,975 crore (Rs 19.75 billion) to Rs 1,872 crore
(Rs 18.72 billion), thanks to the price wars with Procter & Gamble.
The lesson? Power brands may be "powerful" to the company or the retailer, not
necessarily to the consumer. Not everyone agrees. Counters a senior HLL executive,
"The impact was because of the migration phase to power brands - sales of non-power
brands declined." He adds that the company's power brands strategy will boost both
topline and bottomline growth in the future.
It doesn't help that India isn't just one, big market: it's several hundred. Brooke Bond tea
may be a power brand for HLL, but it doesn't face the same enemy in every market in the
country: if Wagh Bakri rules in Gujarat, Girnar and Sapat vie for the top honours in
Maharashtra.
Making matters worse is the fact that rural India is an entirely different nation when it
comes to preferences. That's a problem GCPL, too, faces; at present, rural sales account
for just 30 per cent of the Rs 603.46 crore (Rs 6.03 billion) company's sales, but the
company expects that figure to go up substantially in the coming years.
Marico's Mariwala agrees that penetration is difficult to achieve with a power brands
strategy. Consequently, segmentation takes a hit, because you don't have 20 brands for 20
different people.
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"As a brand grows larger, it simply cannot mean everything to everybody," agrees
London Business School's Kumar. There is a way out, though. Kumar points out that a
power brand strategy allows a company the luxury of targeting fewer segments, but the
more profitable segments.
HLL found another way. In addition to its 30 national superpowers, it also has 10
regional jewels. HLL executives point out that with fewer brands on which to focus, the
company will be able to manage its marketing spends better.
Godrej is attempting to beat regional diversity at its own game. For instance, when toilet
soap Godrej No.1 entered the sub-popular category in 1998-99, it had only one offering:
rose.
It soon also introduced its first variant, sandal, which has proved popular in the southern
markets. The rose variant finds takers in northern states such as Uttar Pradesh, Bihar,Punjab, Madhya Pradesh and Rajasthan.
One, two, three, you go free
If the rural-urban divide cuts into the aspirations of power brands, the changes in the
urban shopping landscape renew hopes. Most analysts expect shoppers to throng to malls
and hypermarkets, for everything from electronics and clothing to groceries.
As the shopping landscape changes in India and malls look down upon hole-in-the-wall
outlets, power brands could be an answer. According to HLL, at present just 3 per cent of
Indian customers shop through organised retail outlets. The average in Asia -- 30 to 35
per cent.
How will organised retail help power brands? In developed markets, all brands, leaving
aside the top three sellers, have to buy space on retailer shelves. Since private labels get a
free ticket to the shelves as the third brand, it is important to be a No. 1 or No. 2 in a
category.
Marketing experts claim that large-format retailers have changed the destiny of
companies in foreign countries. Sheth refers to P&G's experience in Canada. In that
market, rival Unilever was a market leader with loyal customers, while P&G wasn't doing
all that well.
When Wal-Mart entered Canada, it changed the complexion of the market. Wal-Mart
provided P&G a much-needed distribution channel. In five years, P&G gained significant
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market shares in Canada. "When a Wal-Mart happens to India, the power branding
companies will reap better benefits," says Sheth.
That's because organised retail formats will provide more display space to power brands,
their extensions and variants: and marketers believe that whatever gets seen, gets sold.
That's not happening at present. Remember, more than 90 per cent of grocer shops in
India are cubby-hole outlets.
So, what's the final take-away? Will a power brands strategy work in the future in India?
The answer: it depends on the category, the market and the consumer. Now, where have
we heard that before?
Power brands in perspective
Power brands as a concept came into existence by seeing the retailer as an economic
partner. When a P&G executive paid a visit to Japan, he saw the respect and importancegiven to retailers -- something that was not happening in the US where there were several
layers in the distribution channel.
Later, when Wal-Mart emphasised that it was the largest customer for P&G and the
company could work closely with the retail chain and reduce costs in its supply chain,
P&G started power brand projects with Wal-Mart, K Mart and others.
The principle was simple. Brands were rationalised to support the super retailer. In 1999,
P&G's arch-rival Unilever decided to focus on 400 out of its 1,600 strong brand portfolio.
Two years later, Unilever's Indian arm, too, adopted the same strategy. Hindustan Lever
decided to spend on only 30 brands and 10 regional brands from its original basket of 110
brands.
Other Indian companies, too, decided to follow the power brands strategy, including
Godrej, Britannia, Dabur and Marico.
Recently, Vijay Mallya's United Spirits also joined this group by naming Director's
Special, Antiquity, Bagpiper, McDowell No 1, Signature and 10 other brands as power
brands.
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MARKETING MIX FOR RURAL MARKETING
Product
The strategy revolves around what attracts the rural customer to a product. For example -
Packaging. Now the rural customers are usually daily wage earners and they dont have
monthly incomes like the ones in the urban areas have. So the packaging is in smaller
units and lesser-priced packs that they can afford given their kind of income streams.
Then a thing like the colour that attracts him is also important.
Another important factor is Convenience. An example is what Colgate did to its tooth
powder packaging. Firstly - it made sachets as was required by their income streams.
Secondly - since many households dont have proper bathrooms and only have a window
or things like that to keep such things -- it was wise to cap this sachet for convenience of
storage while use. So this is what they did.
There is also a difference in the kind of media mix that is used to convey the messages to
the rural customers. We need to use different models and means to reach them as what
appeals to the urban customer may not appeal to him due to varying lifestyles. The
communication and the design of it are also different as what attracts one need not attract
the other as well. So again, even if the media reaches him, there might not be an impact
as it may fail to attract him as fails to connect to it due to the lifestyles being different.
Then there is the case of product availability that again has different strategies. The
concept of supermarkets coming up in urban areas is not the same as in rural areas. There
the concept of Haats is more prevalent.
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FOR all the management jargon associated with it, CRM has had grassroots beginnings.
Here's a classic example which illustrates this perfectly: CavinKare's Chik shampoo in
50-paise sachets - a huge success which redefined shampoo usage and forced giants such
as HLL and P&G to follow suit - saw the idea germinate from the grassroots. Literally.
Several years ago, CavinKare found that many rural consumers were using bathing soap
for washing their hair. The company field force found the reasons - the rural consumer
had not heard of soaps damaging hair, and in any case, hair was being washed by soaps
for generations by their predecessors. Interestingly, the rural consumer were aware that
shampoos cleansed hair better, but was expensive at Rs 2 per sachet. That's when
CavinKare began working on a shampoo for the rural consumer. The 50-paise Chik
shampoo was conceptualised then, and has since been a runaway success in rural markets
Keep Products Simple and Functional
Driving consumption of goods in rural areas is not just about lowering prices and
increasing volume sales. It is also about product innovation: developing indigenous
products that cater to the needs of rural consumers who demand quality products at an
affordable cost. This requires substantial R&D to better understand consumer behavior
and preferences.
A case in point is the rural market for shampoo. Hair products were introduced to rural
India in an attempt to capitalize on a culture where hair grooming is taken extremely
seriously by women.While rural women may wear faded saris and little jewelry, few step
out without ensuring that
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their hair is in place. Consumer goods companies introduced a transplanted product from
developed markets, the 2-in-1 shampoo/conditioner. Companies thought that women
would be attracted to this product because it was cost-effective, however, initial sales
were dismal. What companies failed to recognize is that most rural consumers had
previously never used shampoo and did not value or understand the full benefits of
conditioner. Several years back, Hindustan Lever focused on product development
strategies for rural consumers who still did not use shampoo in India. Their research
indicated that a prevailing consumer habit in rural India was to use soap for hair and bodycare. Rather than try to change instilled consumer behavior, product developers focused
on creating an opportunity. Consumers wanted a product that was convenient and low-
cost. The result was a new 2-in-1 soap, a product that cleans the hair and body, and is
targeted towards consumers in rural areas.
MODEL VARIANT:-
Models developed specifically for the rural market have found more takers in the market .
For instance, Motorcycles that are designed to take on the rig ours of rural roads have
succeeded more in the rural market.
COLOUR VARIANT :-
The rural consumer differ from their urban cousins in colour preference . in case of some
products , colour may matter vary much . firms can exploit this fact to their advantage .
For example , ASIAN PAINTS understood the substantial difference between the rural
buyer in the colour preference .
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Different products/ models , Different brands, packing, pricing and
different positioning
By and large, the rural market can be tapped better through different products / models ,
different brands, different packaging and different positioning.
PACKAGE DESIGN AND PACK SIZE
In some case , the product can be the same , but the package and pack size may have to
be different for the rural target group. Package design and colour help identification of
brands by rural buyers . Many rural consumers are not quite conversant with various
brands .All the same, they manage to pick the brand that they want . They recognize the
brands by its packaging . This the reason why a number of local brands in rural areas
imitate the packaging of big national brands.
As regard pack size , as a general , it can be stated that smaller packs are more suited
to the rural areas . Low purchasing power and limited availability of cash for shopping
force the rural consumer to go in for smaller packs with low unit price. In some cases
,they also prefer small packs so that they can make a beginning on small scale and after
trial and satisfaction go in for regular purchases.
In recent years , sale of shampoo brands were priced at Re 1 or below per sachet
helped the trail and adoption. The 5-gram Vicks Vapourb tin and the small size
Lifebuoy soap are other such examples.
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HLL, has deepened coverage of many of its products in the rural market through such
combination. It has come up with a series of small pack sizes/saches that specially cater
to low end consumers.
Logo , Symbols and Mnemonics :-
Image is far more potent the rural market , which in many cases is an uninitiated market.
Symbols, therefore , add value to brand recall and brand personality in the rural market.
Asian Paints Gattu :
Asian Paints Gattu though equally well known in urban and rural market , has greater effectiveness as an identity tool in the rural market .Actually in many rural parts of India ,
Asian Paints is referred to as the bahahawala or chokrawala company.
The Nirma Girl:
The Nirma Girl in Frock on the packs of Nirma washing powder has become the
mnemonic for effective and good value in washing powders.
The Dettol Sword and the Mortein Genie:
For the same reason , Reckitt& Colman has been focusing on the Dettol Sword and the
Mortein genie in its rural communication.
Brand Decisions :-
Branding too needs skillful handling in the rural market. The rural consumers have
already graduated from generic products to branded products. Today, the brand name is
the surest means of conveying quality to rural consumers. In other words, brand is the
key to confidence building among the rural consumers. Besides quality, it conveys that
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the manufacturer is going to show sustained interest in those products ands markets.
Whether the same brand is used in both urban and rural market, or appropriate variants of
the brand must be adopted for the rural market , is a matter for conscious decisions by
the individual firms depending on the context.
In quite afew cases , the same brand is providing right and cost effective . In some
cases, however, the brand name that is suited to the urban market may not be quite
suitable to the rural market. Low priced variants seem to work better in majority of cases
in the rural market. It will, however , be incorrect to assume that rural consumers prefer local brands to national brands.
Sell Value Brands, Not Cheap Brands;-
While brands specifically developed for the rural market and low priced variants may
work better in many cases , the strategy should be one of selling value brands . HLLs
Lifebuoy, for example, is a low priced carbolic soap that is often the first choice of bath
soap by a rural consumer .