RURAL MARKETING

What is RuralGovernment agencies like IRDA (Insurance Regulatory And Development Agency and NCAER (National Council for applied Economic Research) define Rural as villages with a population =5000 75% of the mail population engaged in Non agri activity Location with population up to 10000 Considered Rural Semi Urban 10000 to 100000 All locations upto a population of 10000 Will be considered Rural All locations having shops/establishments Upto 10000 (not population related) are Treated as Rural The rural and semi urban area is defined As all cities other than major metros

RB1

NABARD Sahara LG Elect.

Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over the times Was not India a so called Village/Rural for the world a couple of decades backNABARD National Bank for Agriculture & Rural Dev

What is Rural MarketingDeveloping of the market in the area as defined as Rural Hence it could be aptly said that it encompasses the Activities such as developing the process to meet this Objective Right product at the right price to the right people at the right time. Exchange between rural and Urban is a Factor . Could be Urban to Rural: Rural to Urban, Rural to Rural

Size of the market Largely Untapped Too crowded Urban Market

Reasons for Going Rural

Income on the rise/disposable income Income from other than agriculture Income flow from urban /abroad Better exposure - media Great success stories HLL 50% Colgate 50% LG 50% Asian Paints 60% Dabur 40% Videocon 40% Cadburys 25% Hero Honda 40%

Points to Note with Regard to Rural Markets Extremely Diverse Market Villages Size, Population, Spread, Income Literacy levels , awareness level, languages Urban Market scope and saturation Flow of funds from Urban National /International Literacy levels on the rise Media Penetration

Encouraging Indicators/Initiatives for Rural Market Growth Scientific methods major impetus to Production of food grains Export on the rise Increase in agriculture and handicrafts Initiatives taken by banks for more branches and Kisan credit card to buy seeds, fertilizers, consumer goods on installment basis Reputed Companies helping in changing lifestyles Levers Britania ,Dabur, LG, Honda,Videocon Media creating an impact-creating awareness levels Government Policies White Revolution Milk products Yellow Revolution (poultry and edible oils) Blue Revolution Aqua culture Employment Schemes JRY(Jawahar Rojgar Yojna, PMRY,Small Industries Training, Ruiral Electrification, Spend on Health and Sanitation, Medical and Health, Primary Education, Credit card for farmers Waiver of Loans Initiatives by leading organization in spreading awareness Hindustan Levels Shakti, ITC Reliance etc

Move to Rural Market encouraging Data Rural India buys Soft Drinks approx 45% of all soft drinks Almost 50% motor cycles Approx 55% of cigarettes Half the total market for TV,Fans, pressure cooker, bicycles Washing soap, tea, lades, salt, toothpowder Coca Cola is growing over 35% in Rural areas compared to Over 22 % in Urban According to Hasna Research , a market research farm that Has published a Guide to Indian Markets 2006 Consumer durables in Indian Villages risen sharply TV Sales up by 200% Motorcycle by 77% There are 3000 households in rural area that earn > 50 lakhsWe have come some way ahead but there is a long way to go

Low per capita income Low disposable income PROBLEMS IN RURAL MARKETING Inadequate fixed income (daily wages) Majority depends on Agricultural Income Acute dependence on monsoon Consumption linked to harvest Infrastructure problems Roads, power Low awareness Communication- difficult & expensive Too many languages Geographic Spread

Digging for Diamond

Urban & Rural MarketsKey Differences

Per capita Income Disposable Income Literacy levels Infrastructure Communication Geographical Spread Customer has many choices

Profile of the Rural Consumer

Profile of the Rural Consumer>Low Literacy Level >Low Income Level >Massive Geographic Spread Urban population concentrated 3200 cities town Rural scattered over 630000 villages >Reference Group Health Workers Doctors Teachers Panchayat Members Rural Bank Managers District Managers Occupation Principal Farming Trading Handicrafts Cattle & Poultry Farming >Media Habits Fond of music T.V Radio Video Films Generally they have a lot of reservation/inhibition rigid in their behaviour

RURAL CONSUMER CLASSThe Affluent Class The Middle Class The Poor RURAL CONSUMER BEHAVIOR How does an individual decide to spread his Available resources (time,money effort) on Consumption-related products. That is what they buy why they buy when they buy where they buy it how often they buy it how often they use it Well Off Aspirant Poor Climbers

Very Rich

Simple Model of Rural Consumer Behaviour

Need Recognition

Pre Purchase Search Evaluation of Alternatives

Purchase Decision

Post purchase behaviour

Factors that Influence Rural Behaviour

StimuliInputs to any senses Products Package Commercials Brand image Reference Information cues about the characteristics of the product

Attitude>Consumer belief Consumer feelings

PerceptionDepends on

ExposureEg IFB had not adequately Educated farmers about the Washing machine -they thought It was a churn for making large quantities of lassi (prosperous village of Punjab)

InterpretationIodex muscular pain Reliever used on animals After hard days work in MP Godrej hair dye on Buffaloes To make them look better in Village haats in Raichur

Key Challenges 4A

Awareness Affordability Availability Acceptability

4 Ps Promotion Price Product Place

4 As Awareness Affordable Acceptable Available

RURAL MARKET RESEARCH

Marketing Research is a formalized means of obtaining Information to be used in making marketing decisions

Market research Issue Design Manage Analyze Communicate Information Required to address Method of Collecting Information The data collection process The results Finding and implication

Primary Sources Retail shops/STD booths SOURCES FOR CONDUCTING RURAL MARKET RESEARCH Tea Stalls Playgrounds/schools Chaupals (meeting point old/middle aged/ influential) Secondary Sources Haats & Melas Government website www.censusindia.com Influence Group www.indiastat.com www agroindia.com Private bodies (market research advertising agencies Indian Market Research Bureau Thompson Rural Index Guide to Rural Markets Publications

Tool Kits Used for Rural Market Research

Tool Kits Used for Rural Market Research Faces Happy Sad

Color Wheel

Same Color Different shades Different Color

Number of Coins Ladder

Playing Cards

POINTS TO REMEMBER FOR RURAL MARKETING RESEARCH

Remember

Build Rapport - ***

Greet need to be informal Speak local language Do not jump to survey speak of other matters of interest Gradually lead to the objective of the interview Explain the benefit of the survey how it will gain Interviewer should be aware of the rural area Never make the respondent uneasy if he offers tea do not refuse

RURAL MARKET SEGMENTATION TARGETING & POSITIONING

SEGMENTATION Geographic: Very Varied hence proper segmentation very essential Region North, East, West and South Village size Climate Demographic Age Family Size Gender Income,Occupation,Education,Caste Psychographics (consists of psychological: sociology: anthropological) Lifestyle Rigid ,changing attitude, urban influence Personality Authoritarian, Ambitious Behavioral Occasions Regular, special occasion Benefits User status regular user, first time user, non user Usage rate Light, medium, heavy Loyalty None, medium, strong Attitude to ) positive, negative, hostile Product ) Different variables could be used.. multilevel segmentation

Class

Rural Consumer Classification

1995-96

2006=2007

The Affluent/Very Rich

Households owning

1.60%

5.60%

personal cars/jeep with other products The Well Off Household owning any/all of the foll. 2.70% 5.80%

A.C/Motorcycle/scooter/washing m/c

color TV with other durable (No car/jeep) The Climbers Households owning any/all of the foll 8.30% 22.40%

VCR/VCP,mixer grinder sewing m/c

audio equip, B/W TV,geyser with other durables

(not those mentioned in above 2 categories) The Aspirants Households owning any/all of the foll 26.00% 44.60%

bicycle,electric fans, electric iron with other durab

Source - NCAER

(not those mentioned in above 3 categories) Households other than those classified above 61.40% 20.20%

The Destitutes/Poor

DEVELOP THE PROFILE Select the Target Market Evaluate the Market Evaluate the Segment size growth rate profitability accessible compatible with firms resources & capabilities High

Value to Rural Customer

Low EasyEase of Implementation

Hard

TARGETING >Select Target Segment >Formulate Market a marketing strategy for the target market POSITIONING One shoe fits all !!!! . Everything for Everyone !!! It is to Position HowSomething for Someone USP of the product uniqueness of the product Special needs either address partially/ unaddressed Noticeable gap in the products available Positioning Concept Study the possible motives of the rural customer Then figure out how to appeal to them Select & Develop Uses, Class, (USP, Price Qualitythe Concept Culture etc Bridge gap between the product and the target market. Communicate the Concept Advertise and Reach (Media) Offer Product After STP (Segmentation, Targeting and Positioning)

RURAL MARKETING STRATEGY

New Entrant Company starts Rural Market first & then ventures in Urban Market ENTERINING THE RURAL MARKET (eg Cavin Kare Chik & Meera Shampoo) Mid- Entrant Company starts Rural Market after success in Urban Market (eg HLL, LG) Late - Entrant Company starts Rural Market after success in Urban Market for long Purpose R G A Retain (eg Cadbury)market the Grow Add

RURAL MARKETING STRATEGY P L Profile the Rural Market A Profile the Consumer N 1 N Market Behaviour & MR I Segmentation Targeting Positioning N E G --------------------------------------------------------------------------------X Rural Product E Rural Pricing C 2 Rural Distribution U T Rural Sales Force Management I Rural Communication O --------------------------------------------------------------------------------F N E Monitor the Rural Strategy E 3 D Feedback & Control B A C K

DEVELOPMENTAL MARKETINGDevelopmental marketing is a process through which awareness is created >could be demonstration >could be presentation >Free samples >could be through up eg tie up with Bank tie up with Petrol/Diesel pumps Awareness (Hyndai did with IOC and PNB and SBI subsidiaries Trial >30% sale of Hyndai from Rural/Semi Urban areas)Purchase Post-Purchase Satisfaction

Colgate program Operation Jagruti Switch from Charcoal to Colgate tooth powder HLL Free samples of Lifebuoy Cavin Kare Free sample of Chik Champoo Marico Industries Parachute coconut oil Sudhata ki pehchan smell to differentiate between real and spurious

RURAL PRODUCT RURAL PRICE RURAL DISTRIBUTION RURAL SALES FORCE MANAGEMENT RURAL COMMUNICATION

Rural ProductProduct to be marketed with the requirements of the Rural Consumer should not be an extension o urban offerings (Philips launched Free Power Radio does not require Battery/electricity you wind it with a lever and radio runs For approximately 30 min. Classification Of Rural Products FMCG (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi) Consumer Durables TV ,Fridge, Fan, Presssure Cooker, Cycle, Two wheelers, Sewing machines, watch, mixer grinder, radio, music system, Fans, Washing machines (Philips, LG, Videocon, Onida ) Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) Product Life Cycle (PLC) Agri-inputs Seeds, pesticides, tractors Maturity (Rallis India, Bayer,) Take Off Launch

Decline

Points to noteRural Products Easy to Use After sales support Conveniently packed- success of Sachets Product literature to be simple Have a logo easy to identify eg Thums Up Rural Packaging Packaging Rural Brandingmaterial plastics, poly packs, unbreakable materials Looks - attractive colors (like all tea companies) 1. Brand Name Size and convenience- small is beautiful 2 Create Brand Identity 3 Enhance Recognition 4 Build a Brand Image 5 Countering Spurious brands Look alike, Spell alike, Duplicates Enhancing Brand Strategies with Social Perspective Soaps for Hygiene Cooking gas for environment Creating need by more awareness Partnering with a long term perspective requires total belief and Commitment - to the people, to the processes, to their own employee. Need to work for a cause ITC, Hindustan Petroleum, HLL , Colgate Palmolive , Several Banks are a few such examples

RURAL PRICE Pricing In Rural Market plays a key role in the success of a product RURAL PRICING OBJECTIVES Have a long run perspective Idea is to penetrate first Increase Volume Make using the product a habit Volumes to take care of the Margins Keep eye on Competition Price The following may help in addressing the issue Low cost less amount (small packages- sachets) Simple but colorful packaging eg. success of biscuits Refill packs Value engineering eg soya protein in place of milk protein METHODS OF PRICING 1. Cost Plus Pricing = cost of product +distribution +profit 2. Value Pricing (VFM-Value for Money) High Benefit 3. Power Price eg Re 1, Rs 2, 3, 5,10 4. Penetration Price Introduce at low and hike price after success 5. Differential Pricing Different price for different market 6. Price Gap Comp prices range

RURAL DISTRIBUTION Physical Distribution Channel of Distribution

PHYSICAL DISTRIBUTION Transportation

Warehousing Transportation Communication Warehousing

Communication

Railways, Roads ,Waterways, Animals ITC using internet, Mobile users by fisherman (Three Tier Rural Warehousing Set Up) Warehousing Central/State Cooperatives Rural Godowns

WHY CHANNELS OF DISTRIBUTION Geographical Spread Dealers are few hence required to bank on a number of resources Financial Viability Inadequate Bank and Credit Facilities TO ADDRESS THE ABOVE CHALLENGES Rely on Private Village Shops Supply Chain Stores Rural Super MarketSD Small companies tie up with large companies SD Leverage/Syndicate Distribution network of Marico to sell Tide by P&G D R SD

Satellite Distribution SDSD

SD WholeSaler Town

SD

SD

DSD SD SD

DSD SD SD SD

SD

DSD

D-dealer SD- Sub Dealer R-Retailer

PLANNING FOR SALES FORCE MANAGEMENTSET THE PERSONAL SELLING OBJECTIVES FORMULATE THE SALES POLICIES

STRUCTURE THE SALES FORCE SIZE OF THE SALES FORCE ASSIGNING SALES TARGETS CREATING SALES FORCE- SELECT, RECRUIT, TRAIN

SALES FORCE COMPENSATION, MOTIVATION, SUPERVISION

SALES COMMUNICATION & REPORTING

SALES COORDINATION/SALES CONTROL

TRAITS OF A RURAL SALESPERSONHardworking Have Empathy Enthusiastic Perseverance Knowledge Attitude traits for making it Big in Rural Areas Additional Skills Common to both Urban & Rural Sales person

Willingness to work in Rural Areas Adopting to cultural differences Down to earth approach

The Success of Organizations depends on lot on the Sales Force

They are the face of the Organization the Ambassador

They are the ones who have direct interaction with The Potential Consumer/Customer The Users The Dealers The Distributors The Retailers

They are a major link to the chain and establish the link

They are the ones who help in building Trust They need to break the rigid ideas and preconceived notions

RURAL COMMUNICATIONEffective Communication goes a long way in establishing the right Messages and thereby more interaction with Potential Customers Communication, however, is not complete if there is no feedback It is very important to re enforce messages in Rural areas Factors Affecting Rural Communication Literacy level Media Habits Traditional approach High resistance more so initially Lavish at occasions (eg Marriage) Purchasing power also depending on weather- the crops Inequitable distribution of wealth Too many languages Culture

RURAL MEDIA

Mass Media (Conventional)

Traditional Media (Non Conventional)

T.V /Cable network Satellite Channels Radio Print Cinema/ Theatre Word of Mouth Video on Wheels Advantages >Excellent Reach Less expensive ,wider coverage Disadvantages At times unnecessary coverage No customized messages Companies using this medium Levers, Onida, Videocon

Puppet Shows Folk Theatre/Opera Demonstration Haats and Mela Wall painting Post card and posters Booklets/Calendar Advantages >High involvement High Interest Localized administered at low cost Disadvantages Coverage Repeat /Re enforcement Skill of performer Companies using this medium

You are the Marketing Director of A Company dealing in Consumer Durables (TV, Fridge, Washing Machine Music System, Microwave etc). Your business has been growing steadily in the Urban Market however, you are aware that the Business will grow manifold if you also cater to the Rural market. (Present growth rate has been 8%. You are targeting a growth of 14%) Take into account the following The Target Audience The Product proposition Distribution Strategies and Sales Forecast Pricing Strategies Promotional Strategies How the above strategies will help in achieving the Business Objectives. While making the presentation you need to be clear on 1. Why you chose to launch the particular product 2. Why did you chose the particular location (Opportunity Assessment)