1.3.Taxonomy,Changing Patterns, Attraction, Constraints 1 (2)

8/13/2019 1.3.Taxonomy,Changing Patterns, Attraction, Constraints 1 (2)

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Taxonomy, Changing Patterns,Attractiveness, Constraints

RURAL MARKETING


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Taxonomy

Consumer Markets Industrial Markets

Service Markets FMCGs, Durables Seeds,Fertilizers,Pesticides,Tractors,Farm implements Repairs,banking,communication,entertainment


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Map The 7 Os To Each Market

Who constitutes the Market? OCCUPANTS What does the market buy? OBJECTS Why does the market buy? OBJECTIVES

Who participates in the buying? ORGANIZATIONS How does the market buy? OPERATION When does the market buy? OCCASION Where does the market buy? OUTLETS


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Rural Share 1989-90 1992-93 1998-99 2004-2005

Over 75%

1

Radio/ Transistors

2

Bicycle.Radio/Transistors

4

Bicycle.Radio/Transistors,Mechanical WristWatch, B&W TV 6

Bicycle.Radio/Transistors,Mechanical WristWatch, B&W TV,Pressure Cooker,Cassette Recorder

50-75%

5

Bicycle, Motor Cycle,Table Fan, SewingMechanical WristWatch 4

Table Fan, SewingMachine, MechanicalWrist Watch

7

Cassette Recorder,Pressure Cooker,Table Fan, CeilingFan, Sewing Machine,

Motor Cycle, QuartzWrist Watch

6

Table Fan, Ceiling Fan,Sewing Machine, MotorCycle, Quartz WristWatch, Moped

30-50%

7

Moped, B&W TV,Cassette Recorder,Pressure Cooker,Electric Iron, CeilingFan, Quartz WristWatch

8

Moped, Motor Cycle,B&W TV, CassetteRecorder, PressureCooker, Electric Iron,Ceiling Fan

5

Moped, CTV,Mixer/Grinder,Scooter, Electric Iron

4

CTV, Mixer/Grinder,Scooter, Electric Iron

20-30% 2 Scooter,Mixer/Grinder

2 Scooter,Mixer/Grinder

1 Refrigerator 1 Refrigerator

10-20%2

CTV, Refrigerator 1

Refrigerator 2

VCR/VCP, WashingMachine 2

VCR/VCP, WashingMachine

5-10%1

Washing Machine2

VCR/VCP, WashingMachine 0

-0

-

Below 5% 1 VCR/VCP 0 - 0 - 0 -

Changing Patterns


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Income distribution (Million population)

288

130

41

90

153

312

0

100

200

300

400

Low Low er middle Middle high

Rural Urban

2001-02

305

17

79

272

170

352

0

100

200

300

400

Low Low er middle Middle hig

Rural Urban

2009-102001-02


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CONTRIBUTING FACTORS

AgricultureConsistent good monsoons Better procurement prices fixed for various crops

Better yields due to many research programs (HYV seeds provided by thegovernment)

Tax structures Spread of education Improved infrastructure Better banking facilities Government schemes like IRDP, JRY, NREGA Increased expenditure in plan outlay (from Rs.14000 Cr in 7 th plan to

Rs.30000 Cr in 8 th plan)


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Increased penetration of electronic media


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Life style changes

50 % of todays rural income is not comingfrom the agriculture sector

Up gradation from local products to branded and from low priced bands to premium brands

Increasing influence of the youth in the buying decisions.


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HURDLES IN RURAL MARKETING

High distribution costsLarge no. of daily wage earnersAcute dependence on the vagaries of the monsoonsSeasonal consumption linked to harvest and festivals

Inaccessibility to conventional advertising mediaPoor roads, power qualityBanking and credit issuesHigh initial market development expenditureWholesaler and dealer network issues

Highly dispersed and thinly populated marketsSocial and cultural backwardness of the rural masses.Low level of exposure to different product categories and product brands.


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MAJOR CHALLENGES

I. AVAILABLITY

India's 6,38,365 villages are spread over 3.2 mn. sq. kms.720 mn people - reaching them is not easyGiven the poor state of roads, even greater challenge.


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II. AFFORDABLITY

Products need to be affordable to rural consumers ,mostof them are on daily wages.

Some companies have addressed the affordability problem by introducing small unit packs :

GODREJ introduced Cinthol and Fairglow in 50 gram packs priced at Rs.4

coca-cola introduced Sunfill ( a powdered soft drinkconcentrate ) 25 gram pack priced at Rs. 2


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III. ACCEPTABLITY

To gain acceptability for the product orservice, there is a need to offer products

that suit the rural markets and conditions.coca-cola is providing low cost ice-

boxes because of the lack of electricity andrefrigerators in the rural areas.


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IV. AWARENESS

With large parts of rural India inaccessible to conventionaladvertising media, building awareness is anotherchallenge.

Companies like HLL use posters, banners and

wall paintings to create awareness.


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SOME SUCCESSFULAPPROACHES


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Being first on the shelf

The retailers generally stock a single brand in a productcategory.


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Different means of advertisingHaats and melas

A survey by MART (Marketing and ResearchTeam) revealed that 47000haats and 25000 melas take place every year in India

Large visitor turnoutThese melas are held during post harvest season, when the purchasing

power of the people is highThe companies provide touch and feel demonstrations and distributed free

samples


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Advertising

Performing arts including theatre, songs, dance puppetry, magic shows


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Rural Markets advertising points


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CAVIN CARE

First to come out with the concept of sachets and itrevolutionized the whole market, making the Chicshampoo the 2 nd largest selling shampoo in India

What followed was the flood of products in small packing ranging from toothpaste, face creams, soaps, hair

oil


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NIRMA

Introduced the innovative technique of using video vans formarketing Nirma products .

Reach to interior areasOffer opportunity for personal interaction .


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LG

The company needed new cheaper products to capture therural markets . The company did this by introducing a cheaperrange of TV's by the name of Sampoorna .

More offices in small towns. The company opened 178 branchoffices in a short period of time


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2. It also tapped local available opportunities provided by annual haats and fairs and made huge investmentin infrastructure for distribution and marketing.


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3. It brought down the average price of its productsfrom Rs.10 to Rs.5,therby bridging the gap betweensoft drinks and other local options like tea, buttermilk

or lemon water.

4. It doubled the spend on Doordarshan


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5. It focused its entire advertising towards therural customer.

As a result the rural market accounts for 80 %of the new coke drinkers and 30% of its total

volumes.


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ITCs e - CHAUPALThe companys e -chaupal initiative is a novel idea which bypasses the brokers

between the Company and the farmers. It is helping Indian agriculture to enhanceits competitiveness by empowering Indian farmers through the power of the internet.


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Formed in 1946,it is a brand name managed byan apex cooperative organization ,Gujarat Co-operative Milk Marketing Federation Limitedwhich today is jointly owned by some 2.41million milk producers in Gujarat.

Has established itself as a uniquely appropriatemodel for rural development.


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Hindusthan Lever Limited

William Hasketh Lever 1885 Sunlight laundry soap in India 1888 (1757 EIC, 1858 British Raj) Merged with Margariene Unie of Netherlands (vanaspathi) to form

Unilever Ltd UK 1930

Formed Hindustan Manufacturing Co for production of edible oil (1932 75% of 6000 MT edible oil market) Lever Brothers India Pvt Ltd 1933 United Traders for import & distribution of toilet products 1935 Three companies merged to form HLL 1956 (10% public)


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Launching of Brands & Rural Base

Late 1950s modernization of factories Purchased vanaspathi units Trichy (TN), Shamnagar & Gaziabad (Delhi) Vanaspathi 3,36,000 MT Lux 1961

Anik 1961 Sunsilk -1964 Rin 1969 Clinic 1971 Liril 1974

Close Up 1975 Late 1970s set up 70 medium & small-scale factories in rural areas


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Diversification & Expansion Chemical plants at Haldi (Calcutta), Taloja (Maha), Jammu (J & K) FERA NRI 51% - 1980 Followed Govt regulation 10% exports, 60% priority sectors New synthetic detergent plant 1983 (Chindwara, MP) Agri Products 1985 (Hydrabad)

Lifebuoy Personal, Breeze 1987 Colaboration with National Starch Corp,USA Pondicherry 1988 Synthetic detergent plant, toilet soap plant Sumerpur & Orai (UP) 1989 Lifebuoy Plus, Le Sancy 1991 Pepsodent, Methadent G 1992

Tomco, Kwality, Kissan, Lakhme (1992-1996) 50:50 JV Kimberly Clarke USA diapers, sanitary napkins late 1990s JV S C Johnson & Co USA pest repellents & disinfectants


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Indias Leading FMCG company

62% market share FMCG 1998 10 new factories packaged tea, personal products

& detergents

Focused on 30 power brands out of 110 brands 2001 Rs.1100 Cr T/o with PAT Rs.154 Cr. Today 12,000 Cr with 50% from rural markets


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HLLs Distribution Channel

Wholesalers & retailers Stock transfer through vans Redistribution stockists in towns who carried bulk

stocks & serviced retailers 7000 redistributors who serviced over a million

retailers


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Rural Focus

Sales, marketing & production of PowerBrands in rural areas

Key issues to be addressed availability,awareness, overcoming attitudes & habits,penetrative pricing

Target of 16 million new rural households by1999


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Project Streamline (1998)

Rural distribution issues Increase rural retail outlets from 50,000 (1998) to 100,000

(1999)

Selected places with poor base, and no distribution facilitiesat all

Rural distributor with 15 to 20 sub-stockists in villages whodrove distribution in villages through unconventional means(bullock cart)

Offered better service frequency, full line availability andcredit

Reach in rural markets increased from 25% to 37%


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Project Bharat ..cont

Villages with population less than 2000 Self employment through self help groups Direct-to-home distributors

Less than Rs. 750 15 20 villagers Micro-credit from banks By 1999, covered 13 million households

Shampoo 5% U - 16%R Skin care 8% U 14% R


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Project Shakthi (2001)

A.P 6 months Sustainable relationship HLL & low income

customers

Access to micro-credit Invest as company distributors Profit sharing for growth SHGs, NGOs, Govt. bodies to train March 2002 (6 months) 20% increse in sales Guj, MS, MP

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1.3.Taxonomy,Changing Patterns, Attraction, Constraints 1 (2)

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