Unit I

I ntroducti on to rural market : Rural

market- profi l e- characteri sti cs of a
rural consumer Opportuni ti es and
chal l enges from rural markets- fake
encounters i n rural areas. .
Rural marketing
It is often said that markets are made, not
found. This is especially true for the rural
market of India
Urban and rural market
What differentiates the two markets is not
mere income, but a host of other
infrastructural and socio- cultural factors.
Thus, the rural market cannot be tapped
successfully with an urban marketing mindset
and would definitely require the thorough
understanding
In India rural marketing has emerged as an
important in marketing discipline
Meaning of Rural
Collins cobuild dictionary describes the word
rural as places for away from towns or cities
Sociology point of view rural is defined as a
group of people who are traditionalists inout
look, rooted in the land and who resist
change.

The census of India defines rural as that what
is not urban and urban is
locations with in a municipality/ corporation
other location that satisfy the following criteria
1.minimum population of 5,000
2. at least 75% of male workforce engaged in non-
agricultural activities
3. a population density of over 400 person per sq.km.


Each experts comes with different definition
Rural to Hindustan lever may not necessarily
be rural to Philips or Electrolux or somebody
else in terms of marketing and marketing
communications
LG electronics defines all cities other than the
seven metros or rural/ semi-urban areas.
Therefore, it various from company to
company and is also based on the calculation
of market potential valve (MPV)of a particular
area.
Rural marketing
In simple words, is planning and
implementation of marketing function for the
rural areas.
It is a two-way marketing process which
encompasses the discharge of business
activities that direct the flow of goods from
urban to rural areas(for manufactured goods)
and vice-versa (for agriculture produce)
R.Marketing has also been defined as the
process of developing, pricing, promoting,
distributing rural specific goods and services
leading to exchange between urban and rural
markets, which satisfies consumer demand
and also achieves organisational objectives
(Iyer)
Factors differentiating rural
marketing from urban marketing
Infrastructure availability :electricity supply,
finance facility, education level, roads
connectivity
Income streams : in rural areas in is seasonal
and highly unreliable, consumption pattern is
quite different
Life style: daily routine of consumers is
different

Context : because of variation in infrastructure
and income , an individual exists in rural areas
is different
Socio cultural back ground :value system,
goods/services and consumption in general is
quite different
Accessibility : the cost and logistics is high
Media reach and habits: different types of
promotional strategy in these two markets.

Nature of competition : the nature and
intensity of competition amongst the brands is
very different in the two markets
Consumer behaviour : the consumers
response to marketing stimulate differs widely
in two markets
Rural India : A Brief profile
Adi Godrej, chairman, Godrej group . the
rural consumer is discerning and the rural
market is vibrant. At the current rate of
growth, it will soon outstrip the urban market.
The rural market is no longer sleeping but we
are


Cont..
Villages are the heart of India
75% of population lives in 6,38,365 villages
90% is concentrated in the village having
population less than 2000
Rural segment comprises 13.5 crore
households which constitute 72% of total
households in India


But the rural market is not homogeneous
across the country
The consumer willingness to accept
innovation also varies among the rural
market
A brief description of rural India
Rural income distribution
Magnitude of poverty in rural India
Poverty alleviation programmes and rural
development


Rural consumption
Relationship between agriculture, rural income
and consumption
Literacy in rural india
Electricity availability in rural india
Electricity availability in rural india
Development indicators in rural india
A) Rural income distribution
In generating more than half of the national
income
55.6% contribution to the national income by
74.6 crore rural population
But per capita income is low
The annual household income for rural areas
in 2002 was Rs 56,630 as compared to Rs
1,02,963 in urban area

Per capita income in rural and
urban areas
Different economic profile for different
regions, districts and village
There cannot be a single generalisation on the
basis of income for the entire rural India
The marketer has to segment this huge market
according to his product profile and then
select his target market.
B) Magnitude of poverty in rural india
Analyses the phenomenon of poverty and its
spread in rural india
Poverty is measured in terms of proportion of
population living below the poverty line
Poverty line is developed by putting a price on
the minimum required consumption level of
food, clothing, shelter, fuel and health care
ICMR 1958

2,100 calories for urban areas
Per capita monthly expenditure worked out to
Rs 49.09 rural and Rs 56.64 for urban (1973-
74)
As of december 2005, monthly family
expenditure is Rs 1,840 for a family of five in
rural areas and Rs 2,795 in urban areas
32.5 crore Indians lived below poverty line -
1/3 of the country population
The percentage of BPL population varies
significantly from one state to other (ex) orissa
48%, Punjab 6%
Therefore formulating strategies for the rural
market cannot be developed on the basis of
all India figures
Regional variations must be taken
C) Poverty alleviation programmes
These include gram sadak Yojna- providing
urban amenities in rural areas
National rural employment guarantee act
Jawahar rozgar yozra schemes preference to
SC and ST ,and 30% employment
opportunities are reserved for women
D)Rural consumption
FMCG Rs 65,000 crore
Per capita expenditure on education by urban
households was 4,5 times by rural households
Urban spend twice on health compare to rural
Urban rental house five times more that rual
area
42 million, rural, - 27 million, urban avail
banking services

E) relationship between agriculture, rural
income and consumption
The agriculture sectors average annual
growth fell to 1.94%, but the FMCG growth
was around 12%
Getting less depended on agriculture income
Literacy in rural india
The rural literacy level has improved in the
recent past from 36% to 59%
55%reported at least secondary education
Electricity availability----
Almost 56% had an electricity connection in
2005
90% of rural households in punjab and goa are
electrified
25% jharkhand, 10.3% in Bihar

F) development indicators in rural india
Bringing down the poverty level from 55% to
36%
Ranked 138
th
as per the human development
report
Number of Towns and Villages in India
Item Year Number
No. of towns 2001 5,161
No. of villages 2001 *640,000
Source: Census of India, 2001.
Note: * Approximate
Nature and characteri sti cs of the
rural market
1) large and scattered market
75 crore rural consumers who live in
approximately 6,38,365 villages
23% have population less than 200
21% have population between 200 and 500
So widely scattered- raise transportation
costs, affects the viability of the distribution
system


2) Heterogeneous market
Not a homogeneous
24 languages and 1642 dialects- varies every
100 km
Difficult to develop uniform message caste,
community, tradition values (from state to
state, region to region differ)
Punjab Bihar(per capita income)
25,048 5466
562 332(1965)
Variations in economic development and
socio-cultural background influence
Literacy rate in rural south India is higher than
rural north
Rural consumers in the south are more brand
conscious
So, variations in behaviour due to the
consumer environment geographical,
occupational

3) Income from agriculture
55% of rural income comes from the
agriculture sector
Hence rural prosperity is tied with agricultural
prosperity
Cont
Recently- gradual reduction in the sole
dependence on agriculture( other sectors
plays significant role in the rural economy)
4) Standard of living
Lower standard of living
70% rural population is employed in small
scale agricultural and related occupation
Seasonality
As it is unreliability in income- rural consumers
are extremely conscious in their purchase
behaviour
Low literacy, social backwardness, low savings
5) infrastructural facilities
Road, warehouse, communication system and
financial facilities are inadequate in rural area
Roads donot connect nearly 50% villages in
the country
Inadequate infrastructure is single most
important factor distinguishes urban and rural
Promotion and physical distribution thus
becomes very difficult

Life style of rural consumer
Haryana that had tel evi si on( 53%) sets
was more than the number of
househol ds that had toi l ets( 44. 5)
1) rural consumer i s very rel i gi ous
The promoti onal materi al bui l t
around rel i gi ous themes i s not onl y
goi ng to l ast l onger, but wi l l be kept
wi th care by the vi l l ager
Dabur devel oped rel i gi ous cal ender
Rapi d success of the ganga brand
toi l et soap ( contai ned mi l k and i t was
made from the water of ganga) - the
brand regi ster a good response
Govi nda, a ci ne star famous for
rural audi ence

2) rural consumers prefer to work hard
themsel ves
Woul d not l i ke to be repl aced by a
machi ne
They are l ess l i kel y to spend on
products maki ng l i fe a bi t easi er

3) strong fami l y ti es and respect for
fami l y val ues
More conservati ve i n thei r approach
toward the di fferent soci o, economi c
i ssues
The l oose, free fl owi ng hai r of a gi rl
i n a shampoo or hai r oi l
adverti sement may actual l y act as
barri er i n the rural market.
4) likes to play cards and hangs out at choupal
Whatever promotional message is delivered to
the opinion leaders in a village, gets
transmitted
Love chatting with friends
Word of mouth stories develop around easily
and fast
ITC which has created an e-choupal- using the
internet to bring down any barrier with regard
to technology
Profile of rural consumer
1) traditional outlook
Values old customs and tradition
2) perception and its influence
In rural markets, colour, size and shapes are
interpreted differently
(ex) yellow colour indicate prosperity in the
rural south, but it indicate sickness and
disease in s
The lower literacy levels in the rural markets
increase the importance of visual influence
3) less exposure to marketing stimuli
Low exposure to branded product
Advertisement
Source of information and learning
Low convenient buying
4)conscious of value for money


5) realistic aspiration : he can reach out and
stretch the budget but that is done with in
limits only
Dual uasge 15% of surf and 12% of ariel using
families also use nirma detergent
18% of pantene using households also used
clinc plus shampoo
6)concept of quality-values for long lasting
solid), low cost maintenance
7)attitude towards prestige products
Yet they are interested in products adding to
his prestige but the price of a product justifies
the value equation
Challenges in rural marketing
Rural markets remain untapped because of
three Ds
1.distance
2.diversity
3.dispersion

The challenges are..
1.distribution: the problems of physical
distribution of channel mgt adversely affect
the service as well as the cost aspect- it is not
commensurate with the returns that the
marketers expect.(poor infrastructure)
Greatest challenges is reaching out to the
remotest destinations and having a number of
vendors at the retailing end.
2.understanding the psyche of the rural
consumer
Very distinct from one another
Campaigns have to be tailor-made for each
product category, each region, custom in
region, language and dialects etc..
3.limited knowledge
Different research organisations are very
different from one another
Difficult to have limited knowledge
4. communication: comm..barrier due to
language or icons used for advertising
Different interpretation in rural market
Dubbing not a right solution for rural
audience
The context, story line, narration, idiom,
symbols, appeal need to examined while
developing an advertisement
Explain directly and clearly
Urban symbolism,emotional appeal
&indirect
5. cost per contact
Compare the rural promotional cost with the
urban - is the biggest challenge
Renting a van per day cost Rs 3500 and there
are 6 lakhs villages spending 500 dialects to
cover
One exposure may not be sufficient
By simple calculation we can known that the
total cost will be much more to reach the
entire rural market.
6. sale of fakes and spurious product
The retailer pushes imitation products as
they get better margins (retailer)
A research undertake by A.C. Neilsen reported
that the sales value of the fake of P&Gs vicks
brand were almost equal to the sale of the
brand
Seized products worth Rs 35 lakh
Secondly , selling face goods in not a criminal
offense in India and it is under civil law
The only practical way to deal with fake is to
improve the distribution and make the
products available in as many places
Original products imitation
1.pond polons
2.rin run
3.501 bar 509 bar
4. brooke bond paisa benson brand paisa
5. lifebuoy lifejoy, liteboy
7.budgetary allocation
Corporate sector loves the rural markets, but
when it comes to allocations, the amount of
investment in rural marketing is very limited,
observes R. Gopalakrishna executive director,
Tata sons Ltd.
Allocate at least respectable amount of the
budget for research and promtion
8.urban orientation and bias
Rural people are just like urban ones
They too have the same needs, desires and
aspirations
Most of the marketer apply minor
modifications (of the indian urban market)
But, these paradigms (patterns) fail

9.lack of right competence and commitment
at frontline level
Most of the frontline staff is from the urban
areas
They are not very comfortable to travel and
interact with the villager
Solution is recruiting frontline staff from the
rural parts of india
Opportunities in rural markets
As per I. Natarajan, chief economist The
rural marketer has tremendous opportunity
and he stated clearly that, it was not the
buying power but the distribution , which was
the biggest hindrance in realising the potential
of the rural market
5 lakh ruraliter have gone abroad- sending
remittances

HLL gets 50% of its sales turnover of RS 11,700
crores froms r.india
LIC sells 50% of its policies in rural india
FMCGs market worth Rs 64800 crore are
selling in R.india
Carbonated soft drinks worth Rs 1800 crore
are selling in R.india
Clearly states that rural market is not as poor
as it is perceived
1.rising rural prosperity
Monsoons were normal for 11 out of 13 years
Major drought year was 1987-88
The ratio of rural per capita income to urban
per capita income is increasing
The rural consuming class is increasing by
about 3-4% per annum
The government also spends hundreds of
thousands of crores of rupees in rural area
Cont.

Rural Haryana had more super rich than not
just the urban Haryana
Rural Haryana- 482
Urban - 340
Bangalore - 137
Hyderabad - 226 (2001-2002)
2. lesser dependence on agriculture and
monsoon
There is a time when market predictions were
made on the basis of the state of the
monsoon
Changed over the year, large non-farming
sector-which generate almost 45% of the rural
wealth
Rakesh kalra, CEO Eicher moto
Rakesh kalra, CEO Eicher motor agreed as
long as the rain deficiency during monsoon is
not more than 20% the long term average
there is nt a significant negative impact on
the commercial vehicle sales.
3. increasing rural consumption
More than urban
Sales of FMCGs is 53%
Durable goods 59%

FMCGs RS 650000 crore out of a total market
Rs 1,23,000 crore
Just a 1% rise in rural incoem translates into Rs
10,000 crore of buying power
Among the seven high consumption state
punjab is the lead position
Low expenditure- bihar, madhy pradesh,
assam
Average-karnataka, uttar pradesh, T.N, orissa
Tax- exemption on rural income too has been
enhanced rural purchasing power
4. rural marketing efforts
Innovative models are being developed to
take the products to the rural retailers shelves
5. increasing sale of branded product
Branded goods comprise 65% of sales in
villages today and share of non branded goods
is shrinking dramatically

6. large popualtion
The population is very large and its growth
rate is also high
C.K. Prahlad, the future lies with companies
who see the poor as their customer
There is an opportunity to make a lot of
money in rural india. But, there are obstacle
too i.e rural consumers is still evolving.
Rural products
Unit III
Rural Buyer Behaviour: Rural buyer behaviour
Factors determining rural consumption
Rural buying process Current trends in rural
buying behaviour.

Consumer behaviour
Dynamic behaviour and the environment by
which human beings conduct
It can be understood, by the statistical report
Continuous study should be there
Knowledge of buyer behaviour is vital for
marketing strategic
Definition consumer behaviour
Schiffman and kanuck the behaviour that
consumers display in searching for,
purchasing, using, evaluating and disposing of
products and services that they expect will
satisfy their needs. It is thus a study of how
individuals make decisions to spend their
available resources like time, money, effort-
on consumption related items.
Fundamentals of consumer
behaviour
Four types of buying behaviour, based on the
following two parameter
1) degree of buyer involvement ( high and
low)
2.degree of differences among brands
(significance and non significance)
High involvement Low involvement
Significant
differences
among brands
Complex buying
behaviour
(expensive, may
difference in brands
like computer,
automobile)
Variety seeking
buying behaviour
(less expensive and
frequently purchased,
experience
size,smell, sound,
touch, ice crea,
confection) per yr
India 6 brand,
america -2 brand
Few
difference
among brand
Dissonance reducing
behaviour(expensive,
but few different like
social products-
furniture)
Habitual buying
behaviour(low cost,
frequently purchased
salt,soap,-exception
in cigaretter- brand
preference is more)
On basis of the amount of time
spent, purchase behaviour can be
classifies
Planned purchase behaviour
Emergency purchase behaviour(to avoid
stock-out)
Impulse purchase behaviour(purchase
spontaneously, taking decision on the spot)
The consumer passes through a
series of steps while purchase
Step 1. need identification /problem
awareness
Step 2. information gathering
Step 3. evaluation of alternative solution
Step 4. selection of appropriate solution
Step 5. post purchase evaluation of decision
Postpurchase
Behavior
Purchase
Evaluation
of Alternatives
Information Search
Need Recognition

Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Post purchase behaviour
?
Cognitive Dissonance
?

Did I make a good decision?

Did I buy the right product?

Did I get a good value?
?
Sour Grapes
a story of
cognitive dissonance after being unable to
reach the grapes the fox said, these grapes
are probably sour, and if I had them I would
not eat them.
--
Aesop




Factors which influence rural
consumers during purchase of a
product
Acceptance of washing machines and
rejection of dish washers
Acceptance of maggi noodle and rejection of
kelloggs cornflake
Can only understood in terms of consumer
behaviour with regard to the positioning and
marketing mix of the organisation
1.social cultural factors
Influenced by social customs, traditions and
beliefs
Caste influences are direct and strong
Conservative in their outlook, take a longer
time to be influenced
Discuss the issue of purchase- important and
knowledgeable
Rural youth are more open
2.group
Consumers are part of a group to which they
belong
Opinion leader- a teacher, bank manager, vDO,
etc
The acceptability of an idea by the group and
by the leader is critical in rural areas.
3.family
Family size and the role played by family
members (joint family)
4. Role and status
Role refers to the behaviour expected of an
individual
Status refers to the respect given to the
individual by the society
Head master demonstration- opinion
leaders can be useful in transforming the
opinion of others
5. sociability
In rural areas, individual are know and
identified better
Accepted by the group makes them agreeable
6.economic factors
More than 70% of the people are in small-
scale agricultural occupation
These factors affect the purchase decision
7. political factors
Programmes for self-employment like the
prime ministers Rojgar Yojana (RMRY)of the
cental govt.
CMEY- chief minister employment yojana
program in Andhra pradesh increase the
potential of the rural market
The IT, telecom and infrastructure policy,
which is bringing connectivity to village is
empowering the consumer
8. factors which influence the final choice
Attitude of other
Advice of the retailer
Experience at the retail outlet
Demonstration of product
Unanticipated situational factors
Mood swing
Perceived risk
examples
Creating Rural-specifi c Messages
Not all commercials are accepted by rural folk. Social workers
recount stories of advertisements that confuse or scandalise rural
viewers. For instance, members of some rural communities in
Rajasthan were offended by the Halo shampoo spot, featuring female
models with beautiful, bouncy hair. The reason was that here it is
considered indecent for women to let down their hair in public.
The same villagers were bemused by the Strepsils Bahut Mazaa aya
advertisement. In their dialect, the word mazaa has a strong sexual
connotation and they could not understand how anyone could get
corporeal pleasure from a cough lozenge (Ghosh, 1994).
Rural consumers increasing trend
towards consumption
Until 1980-81, per capita of india was just
under RS 2000 but even then household
saving rate was 18-20%
A dramatic change is in progress- charcoal-
cleaned teeth are a rare sight- use of twigs of
neem and babool tree
Household are upgrading from indigenous
teeth cleaning ingredients to toothpowder
and tooth paste
Shifting from low priced brands to premium brands
Today, the bright shine of colgate or some other
international brand of tooth paste holds more appeal
than the traditional methods of cleaning teeth
At a seminar on rural marketing, organised in New
Delhi , by the international development enterprise,
the Indian rural tastes are changing fast, thereby
reflecting a marked improvement in the purchasing
power of village household



In 1990-1992 lowest end of rural market
earned around Rs 14000 per year, today
segments annual earning Rs 24,000
Rural buyers disenchantment with second
hand item , thank to competition increasingly
purchasing new product.
Conclusion
The size of the rural market is quantitative and
qualitative
Mr. kartik raina of dalmia consumer care-
tobacco free beedi called vardaan
the rural market in not for all, but for those
with the guts, the skin of an elephant and the
mind of an evangelist .
Most successful brand Hero Honda is no
more
by khalid on 18/12/2010 in Bazaar
Talk,Intresting News
Hero Honda is the most successful brand
name in India. It is the largest player in the
market in two wheeler segment

Saluting the spirit of women empowerment
Fair & Lovely Foundation offers honoured.

Saluting the spirit of women empowerment
Fair & Lovely Foundation offers scholarships to
212 meritorious girls. Five women achievers
honoured.

Unilever Sustainable Living Plan Unveiled
We meet everyday needs for nutrition, hygiene and personal
care with brands that help people feel good, look good and get
more out of life.

HUL brands top India's Most Trusted Brand
Survey
30-08-2010: Once again this year HUL brands
have topped the Indias Most Trusted Brands
Survey rankings. Six HUL brands (Lux,
Lifebuoy, Clinic Plus, Pond's, Fair & Lovely and
Pepsodent) feature in the top 10 and eight in
the top 20.

Creating Space in the Village Shop(case)
A study on the response of consumers to marketing efforts in villages
around Jamshedpur was carried out. The Nirma vs Wheel drama
was also enacted in these markets. Nirma created a position amongst
the rural consumers with its media efforts as an effective cleaning
product. The Wheel launch followed also with media support but was
not perceived to be as effective in cleaning. Nirma was available from
its distributor located in Jamshedpur unlike Wheel which pushed its
brand into the interior markets. Consumer preference for Nirma was
not supported with consistency in availability. The consumer switch
to Wheel helped gain its share of the market.
case
Market Development Strategy of HLL
In 1999, the soaps, detergents, and personal product segments
of HLL owed their growth strategy to a strong rural thrust. HLL
launched its Operation Bharat, a 20 million household national
sampling exercise for its personal products portfolio. As part of the
campaign, low priced sample packets of toothpastes, fairness creams,
shampoos (Clinic Plus) and talcum powder (Ponds) were handed
out to 20 million households.
According to Dalip Sehgal, Head of Marketing (Personal Products)
in HLL, The size of the pie will increase from the rural segment, not
the urban segment. So the focus should be more on market development
rather than market share at the moment (Zaheer, 1999).
WALL PAINTING An Economical
and best Media in Rural Marketing
MOBILE VAN An Effective way of
Communication

examples
Behaviour Variations of Watch Buyers
The demand for watches is high in rural areas and it increases
during the marriage season. This is true throughout the country. The
variation is, however, in the type of watch and brand that is preferred
by the consumers. In the villages of the north, winding watches are
preferred which are bought from large feeder villages nearby. They
fi nd it convenient to get it serviced at a nearby place. The awareness
of quartz brand of watch is limited. The awareness of a brand is usually
from newspapers in addition to word of mouth.
In the south, the preference is for a quartz watch and is purchased
from a showroom in the town. In some of the villages, television has
created a high degree of product awareness. As the purchase of quartz
watches is expensive, the villager prefers to buy it from the town and
is willing to take it back to the showroom in town in the event there
is a problem with the watch.
Occupation
examples
Strategy to Refl ect the Social-Cultural Infl uences on Behaviour
In rural areas the houses are painted during festival season. The
demand for distemper paints is therefore very large. This demand is
met by local brands, which are of low quality. Asian Paints developed a
product with bright colour shades (preferred by the rural consumers)
for rural markets and which had greater durability than the local
brands. It launched the product in a pouch form and with the brand
name Utsav (meaning festival). Utsav was promoted as a good quality
economy brand. It used wall paintings and point-of-purchase displays
to create awareness. It identifi ed dealers and sub-dealers who had the
potential to stock and sell Utsav. To demonstrate the quality of Utsav,
the company painted the headmans house or post offi ce. The brand
was well accepted by the rural consumer.
The social-cultural infl uences on behaviour need understanding
for developing an effective marketing strategy
Unit IV
Product and pricing for rural market:marketing
mix for rural markets- developing a new
product for rural market- product life cycle-
innovations in product design rural market-
branding products for rural markets price
determination for rural market- pricing
methods for rural market.
Rural marketing mix
Introduction
Indepth understanding- rural life style, identify
needs of rural consumers
The success of a product like shampoo in the
rural market acting upon the consumer
insight- made cavinkares chik sampoo(market
leader in a market which was not using
shampoo at all)
Marketing mix
A series of interconnected and interdependent
marketing issues that need to be considered
together
First developed by Neil Borden in 1950
1960s jerome Mccarthy (Harvard) elaborated the
concept of the four Ps
Marketing mix refers to the set of actions, tactics
tools or variables that a company uses to promote
and sell its brand or product in a market
4Ps of marketing
Decisions about the controlled marketing
variables
4Ps : product, price, promotion, and place
(distribution)
Several other Ps: Packaging, positioning,
people, pace, passion, publics and even
politics as well

Decisions be taken after assigning a value to
each variable some variables could be
1.price- price level, credit terms, price changes
and discounts
2. product features, packaging, quality and
range
3. promotion: advertising, publicity, sales
promotion and personal selling
4. place inventory, distribution channels and
number of intermediats

By choosing the appropriate level , the right
marketing mix can be developed
The marketing tools and the possible
variations are top end luxury model, medium
range product and value for money low end
product.
1)product anything that is capable of or can
be offered to satisfy a need or want- include
tangible and intangible service
However, a product must deliver a minimum
level of performance, otherwise even the best
work on the other elements of marketing mix
wont do any good in the long run
2)Price refers to the amount the customer
has to pay inorder to acquire a product or
service
Cont
Depended factors are:
Cost of production
Segment targeted
Ability of the market to pay
Demand and supply of competing products and
substitutes
Pricing objective of the firm
Other direct and indirect factors
4 Cs of pricing
(a)costumer value- value the customer
perceives that the product delivers
(b) competitors prices
(c) cost to the company- combination of fixed
and variable cost
(d) strategic and pricing objectives of the
company- the financial, marketing and
strategic objectives that the organization has
decided to achieve from a product.
Pricing objectives
To maximise long run profit
To maximise short run profit
To increase market share
To match competitors prices
To survive in the short run

case
Typical Strategy in Rural Markets: Crane Supari
Crane betel nut powder is a leading brand of betel nut powder in
South India. It is known for its quality and has a very strong consumer
loyalty. The packs are sold in convenient price slots of 50 paise, Re 1,
Rs 2 and Rs 5. The pack sizes include, apart from very small packs,
packs of 25 gms, 50 gms, 100 gms, 250 gms and half kg. There are six
varieties of arecanut and brand building is through maintaining the
taste. The product range includes both spicy and sweet supari.
The channel includes distributors, sub-distributors, wholesalers
and retailers. The distributors are reached through company vehicles
within three days of the receipt of requisition along with a draft for
advance payment. In the case of rural markets, the distribution is
once a month through trucks that follow an itinerary. In the case of
smaller and interior areas, transporters are used. In addition to this,
the company provides van support to distributors for delivering to
rural markets. The company makes available to the rural distributors
small vans with the condition that they carry only the Crane brand.
The days expenditure for the van is borne by the distributor who
uses it.
The media used in rural markets include cable television, stickers
and danglers, painting the sides of buses, wall paintings and shop
paintings. Mimicry and dance drama were used in the early Nineties,
but no longer. Vans were used to create awareness and to provide
brand knowledge in between songs that attracted attention. The
vans were also painted with the brand message. This kind of promotion
is no longer used as the company does not fi nd them effective.
A large part of the promotion to rural areas today is through stalls
in fairs followed by wall paintings. Other media are used but to a
limited extent.
The brand has a good image in the rural market but the presence
of a large number of local and small brands competing on price
restrict the market share. The rural market is large but because of
price competition its major share is from the urban market. It is
the leader in South India but its leadership is because of the urban
market.
Pricing process
Step 1- developing the marketing strategy:
performing the segmentation, targeting and
positioning functions
Step 2- making the marketing mix decision-
determining the other 3 Ps:product, place and
promotion
Step 3 estimating the demand curve
analysing how the demand is likely to vary
with the price
Step 4- calculating the cost determining the
fixed and the variable cost likely to be
associated
Step 5 developing an understanding of the
environmental factors- the competitive as well
as the legal environment scenario
Step 6 finalising the pricing objectives
maximise long run profit, short run profit
Step 7 determining the price selecting the
price method, determine the margins and
discounts
Pricing methods
A) cost plus pricing- organisations add certain profit
margin over the cost of the product
B) target return pricing targeted return on its
investment
C) value based pricing based on customers
perception of value
D) psychological pricing- already existing reference or
psychological prices in the mind of customer
Pricing through the product or service life cycle
Place
Refers to the point of sale
The main aim of distribution or place strategy-
catching the eye of the consumer and making
it easy for to buy a product
ideal balance between the cost to the
organisation and consequent convenience to
the customer
In fact, the mantra of a successful retail
business is location

Distribution
Means ensuring the spread of the product
throughout the market place in a manner ,so
that a large number of people can buy it.
Distribution channels
Flow of products from the site of manufacture
to the point of sale
Conventional channel : factory- c&f-
distributors- retailers(most common channel
for the most goods)

Unconventional channels like- Internet portals or a
network of salespersons
Promotion
to make the product or service known to and
preferred amongst the user and trade.
Advertising, word of mouth, press, incentives ,
commission, awards to the traders, consumer
schemes, direct marketing, contest and prize mass
media
IMC integrated marketing communication
promoting the companys goal to its target audiences
Clearing and Forwarding Agent (C&F)
The clearing and forwarding agent is the
representative of the manufacturer. The C&F
manages the company's warehouse and handles
distribution on behalf of the company.

The goods that the C&F deals in is the property of
the company he is representing. The C&F gets a small
commission for his services. The C&F deals with the
wholesalers - including the super-stockist, stockists
and distributors.

examples
Complex Communication as Barriers to Reception
It is relevant to share our recent experience on a market survey on
pesticides. Here we have a serious communication problem. Though
there are local names of pests, but all the material released by all the
pesticides companies mostly identify the pests by their English and
academic nomenclature. There are generic names used for pesticides
which again are in English. Some of these names are diffi cult
to pronounce. For example, Monocrotophos, the brand name such
as Nuvacron. The choice for the consumers increases in complexity
because of additional dimensions. Additional dimensions are the
manufacturers, formulation strength, product form and varying percentages
of technical material content. Cont
The entire exercise is so complicated that the marketing organisations
are not able to effectively communicate with the farmer on
the brand name of the pesticide for a given pest. The result is not
only an improper and wrong selection of pesticide but also that the
recommended dosages are not being used, and the farmer blames
the pesticide and the manufacturer for the ineffective treatment. The
fertiliser manufacturers have introduced simple symbols and brands
like Star brand, Crescent brand, etc. Such sign language needs to be
developed in case of pesticides also ( Jain, 1983).
Signs and Symbols in Rural Markets
A number of successful brands in rural markets have brand names or
symbols with numbers or animals. These include 555 soap, Monkey
brand toothpowder, Gemini Tea (with an elephant), Cheetah fi ght
matches or Sheru (tiger) beedi and Tiger cigarettes. The association
of symbols with these brands helps recollection. The 3-Roses brand
of tea makes the rural consumer think and feel fresh. The symbol
helps associate the product features with the brand of tea. The
symbols that make the consumer feel and think about features that
are relevant for the product are critical for brand building in the
rural market (Krishnamurthy, 1999).
Case
Usha International Ltd.
Usha International Limited (UIL) of the Siddharth Shriram group
proposes to increase its focus on the rural market, which contributes
50 per cent of its total income. It plans to increase the penetration
level of its fans in rural areas from the current 5 per cent by introducing
fans (both ceiling and table) designed to function under
severe conditions of voltage fl uctuations. They will be priced 30 per
cent less than normal. It also plans to increase the penetration level
of its sewing machines in rural areas from the current 11 per cent
by introducing low cost models. UIL intends to route its products
for the rural market through its diesel engine dealers, completing
its strtategy to make use of product design and pricing decision to
deliver value to the rural consumer
Rural marketing mix
Marketing mix conceptually remains valid for
the rural market
Every product and promotion, which is a hit in
cities, might not work in rural areas
It doesnt mean, Indian villages belongs to
restricted zone
They are different as consumers and hence,
market differently
Product
Modified to suit the lifestyle and needs of the
rural consumers
Rural consumers like to buy products for need
based consumption
Recycling and putting a product to all possible
practical uses before discarding
While designing a product- consider reuse and
recycle
The product to be useful and easy to use
Appear tough and rugged- outlook
As less educated new technology
acceptance is also less
Cellular phone-washing machines not
accepting
Acceptance- solve their problems ,suits their
culture and their pocket and worth the price
Branding
Making them change their product or brand is
very difficult
Higher brand loyalty among the villager
Once a brand is accept(vill, state, region) very
difficult to replace
According to Harish Manawani ,the vice
president HLL, international brands need to
be relevant interms of perceived image,
performance value if they are t succeed in the
Indian market
Packaging
The decision of packaging is influenced by the
characteristics of consumers i.e affordability,
cultural preferences, usage conditions and
ability to read
Minimum quantity of the product for weaker
section(financially poor)
The problem of dust, heat or bumpy roads
special stress on packaging
Packaging size store- another problem for
customer or retailer
Colgate put a cap on the sachet for
convenience of storage
Attractive, decorative and synchronisation
with local culture- should not be costly
Writing products name in the local language-
consumer awareness
Colour and convenience of package are very
important
Illiterate not able to ask for a brand-
advertised recognise the product by its
packaging
This is why (imitating the packaging ) is
available in village shops
SKU
Stock keeping unit
Organisations should maintain a smaller
number of SKU for the rural market
As the rural retailer has a limited working
capital
Product strategies
In rural marketing
1) new/modified product designs
A) research and marketing department think
new design according to their (rural) life style
B)rural environment- product tough- rough
handling, rough roads and frequent power
fluctuation
C) nokias1100- customised model for rural
D)dust resistant, small torch, economically etc.
2)sturdy product- sturdy enough to stand
rough handling, transport and storage
3) utility oriented product- more concerned
with the functional utility of the product than
its appearance and sophistication
4)avoiding sophistication packaging
5) refill packs/ reusable packaging
6) application of value engineering-
substituting the costly raw material with the
cheaper one- cheaper but better quality
7)brand name- brand awareness in the rural
areas is fairly high. The only issue is that the
brands are known differently than they are
known in the urban market (fake product)
8) small unit packaging
Low per capita income single serve packets
or sachets are enormously popular
The use of 50 p or 7 ml sachets is declining in
the rural areas by 10%
Bigger packs for jam and milk powder are
doing well even smaller is available

Price
Price is the most important phenomena
affecting rural market
Little extra for better qualilty- cheaper version
Some retailers in the interior villages charge
more than the maximum retail price(mrp)-to
fetch spend time and money from
distributors

Prices of substitutes also must be studied
along with the pricing of the competitors
As coca cola found out that it was not just
pepsi that they were competing with in the
rural market, but also nimbu paani, jal jeera
and others
Pricing strategies
As per capita income of india was low
Extremely price sensitive
(a)large volume- low margin : rapid or slow
penetration strategy
To focus on generating large volumes
Not big profit margins

(b)over all efficiency and passing on benefits
to consumer
The strategy should be to cut down the
production distribution and advertising cost
Passing the benefits to the customers to
further increase the turnover
Observed that advertising has less to dowith
product sales in the rural areas

low cost/value for money products
The price can be kept low by smaller unit
packaging
(d) low volume low price strategy
Reducing the package size- more affordable
especially in finance
(e) ensuring price compliance
Rural retailers most of the time, charge more
than the MRP
Manufactures has to ensure price
Place
Third P
Village as place for promotion, distribution-
different form town or city general
marketing theories cant be applied
Reaching right place is the toughest part in
todays market
Because high distribution cost
Most the rural retailers themselves go to the
urban areas to procure these goods
Significance of distribution
The best product, price, promotion and
people come to nothing if the product is not
available for sale at the point
Good distribution system- company has
greater chance of sellling it s product more
than its competitors
In the FMCG industry in india companies
have to distribute to over 10 lakh retail outlets
or point of sale
Now a days direct marketing through
internet- feasible for the smaller villages

Place strategy
(a) segmentation
Examine the market potential of different
villages and target the villages that can be
served ina financially viable
Not viable to contact and serve all the village
(b)coverage of villages with 2,000 and above
population
Distribution network in about 55000 villages
have population of 2000 person and above
can cover about 25 crore rural consumers
Good to begin with lesser populations
distribution up to feeder markets/mandi
towns
The feeder markets and mandi town offer
excellent scope for distribution
The rural consumers visit these towns at
regular intervals, not only for selling their
agricultural product but also for purchase
(d)joint distribution by non-competing
companies
As distribution vans can be unviable for a
single company
Different non- competing companies can
come together to jointly operate distribution
vans
(e)direct contact with rural retail
Along with the efforts of wholesalers and
dealers, companies need to have direct points
of contact, with retailers and sub- retailers
(f) shandies/haats
Held on a particular day of every week
Distributors in the area can utilise mobile
tractors to sell the products

(g) agricultural input dealers
As per the essential commodities act,fertilizers
should be made available to the farmers with
ina range of 4 to 5 KM from their residence
About 2 lakh fertilizer dealers in the country
Both in coopertative and private sectors
These outlets can be used to market
(h) use of co operative societies
At least one cooperative society of one form
or the other, for every 1 or 2 villages
(i)utilisation of public distribution system
(j) multi-purpose distribution centers by
petroleum companies
The petroleum retail outlets now will be seen
stocking some non-petroleum retail outlets
now will be seen stocking
(k) post and telegraph department
(l) alternate retail /distribution channels
Milk man, vegetable vendor, entry and exit
point of village
(m) personel selling network
Residents of the village or community
(n) e- marketing
E-choupals, direct contact with the rural
consumer
Promotion
As it is thin population- promotion aspect is
challenge
Media dark- inaccessible to television
signals- not only denied to access to product
but also knowledge about it.
Problem in mass media communication- time
gap between the point of exposure and the
time of purchase
The memorability of the message while it
last till the time of purchase
Survey 16%of rural and 25% of urban
consumer felt that advertising influenced
them to frequently or always to buy products
they donot really need
19% rural and 30% urban advertisements
are frequently misleading
case
Responses to Consumer Behaviour
Hindustan Lever found that retailers in villages
were cutting its large
100 gm Lifebuoy soap into smaller pieces and
selling these. So it
introduced a smaller 75 gm pack. It also
introduced Wheel detergent
in a 100 gm pack (Joshi, 1991).
Media vehicles and rural market
1.mass media
In rural market, 2 out of 5 indians are not
reached by any media : tv, press, radio and
cinema together
(a) television
Tv penetration in rural homes was about 26%
in 2002 , 66% of urban area
In 1993 it was 13% and 49% in urban area
Although the number of television channels
have increased from 6 channels in 1991 to
300 by the end of 2004
As of now doordarshan telecast network
nearly covers the entire country
55% reach in 1997 DDs
Since, one third of india is not covered by DD

(b) radio: primary source of entertainment in
rural market
listenership stands in the 20% range for both
urban and rural
20% listenership is a good number in terms of
popualation
print media
Literacy level is low in rural areas
Through dailies, periodicals, pamphlets,
booklets


But reading habit in the rural areas does not
appear to be very good
Reaches the rich families of the villages- so
work of mouth
Should not ignored because it reach the
opinion leaders
(d) cinema
of rural adult population view cinema in the
southern region so effective media
(e)hoarding/ wall paints
Walls of shops and other place are easily
available
Relatively longer span than other mass medis
Unconventional media
As media does not cover as much as 43% of
rural india
Events like fair, festivals, cinema van, shop
front
Stickers on hand pumps, wall of wells, putting
on tin plates on all the trees, pond- innovative
media used by HLL for lux, life boy and wheel
Folk media quite popular in different regions
and state
High frequency Low frequency
High reach Jeep, wall painting, bus
stand , haat, hoarding
Van based advertising ,
melas, direct to home,
exhibitions/ created
events
Low reach Co operative notice,
shop front painting, tin
plating calender /
label
Tin plating trees /
shop leaflets, posters
and banners , danglers
Promotion strategies
1.Think global act local
Rural population is diverse
But the commonalities of their ethos and
simple living habits need to be understood for
advertising to succeed( context, story line,
language and idioms)
2. think in local idiom
thanda matlab coca cola


3.simplicity and clarity
4.Narrative story style
5.Choice of brand ambassadors
govinda in the mirinda ad boosted the sales
of the drink in rural market.
Additional Ps of rural marketing
1. passion it represents an attitude of three
dimension
a) passion to earn goodwill for the
company
b) passion to serve and educate the
consumer
c) passion to give 100% to the rural
marketing effort.
2) pace (step by step)
Rural market need to be launched into the
heart of the customer
Working capital and storing space donot allow
rural retailer to store numerous brand
He can sell whatever he is stocking
Thus companies have to reach the retailer
early

4 As of rural marketing mix
1. affordability : not cheaper product,
designing products which match the needs of
rural consumers, at a price that they feel
2. availability: lesser number of brands
available at rural retail outlet
Ensuring the reach of the products at the
retailers shelf is one of the most critical
function
3.awareness : they use unconventional media
along with commercial media like TV , Radio
Elements like colour, logo, slogan designed
according to the rural consumer
4. Acceptability
They must feel that the product serves its
purpose, then they are ready to even spend
extra for the product
examples
Oscar Televisions Offering to the Rural Markets
the leading television brands. Arpita Khurana, the director of the
Oscar television competed effectively in the rural markets against
company expects a boom in the rural market with growth of nearly
80 per cent.
Oscar television competes in the rural market by providing a no frill
value for money product. For instance, Oscar, which derives 40 per
cent of its sales from the semi-urban and rural sectors, has launched
a battery-operated television model in the 14" segment to cater to
parts of Eastern UP and Bihar. This has boosted the companys sales
by 5 per cent to 7 per cent. It is planning to come out with a similar
21" model in the near future. Says Khurana, Since electricity is a
problem in these areas, we felt the model would be a success.
Source: (Ghosh and Verma, 2003).
cases
Product Design that Responds to Consumer Perceptions
Union Carbide found that its slick plastic torches, which were all
the rage in the metros, had no takers in the villages. Farmers preferred
heavy brass torches. Says Union Carbide Managing director,
V.P. Gokhale With brass torches, they feel they are getting value for
money.
Texla drew a blank with its television sets with grey and black
cabinets as farmers did not prefer the somber urban shades. It introduced
a new range in bright red and yellow, which was refl ected in
a dramatically increased acceptance by rural markets (Das Gupta
and Menon, 1990).
Philips promotes the size of its music systems to rural consumers.
Consumers are willing to pay a higher price for larger models assuming
that big is better. The company now makes its rural models one
and a half times larger and louder than the ones for urban markets
(Mukherjee, 1993).
New product development for the
rural market
Not invention- minor modification existing product
Objectives
1.Satisfy customer demand
2.Competitors launch new product
3.Expand strategy
4.Changes in technology
5.Increase in sales and profit
6.Single product business vulnerable to multi product
business
7.Maturing stages and decline stage

New product development process
A) exploration stage:
Ideas for new products is within a company itself
60% of industrial and 46% of consumer new product
ideas came from the research staff engineers , sales
people
30% of consumer product ideas came from the user
Market feed back and research- key role to play
Team - assimilate all new product ideas on a single
format
evaluation
B) screening stage
Elimination process- which carry unacceptable level
of risk
Vital criteria for evaluation
1) nature of demand
2) compatibility new idea matches with the
corporate objectives, impact the existing product
3)resource what amount of money, tech, time
4) competition actual competition strength
and weakness
C) detailed value offering evaluation
After screening only few are left for consideration
Time for detail product specification need
satisfying, simple and easy, convenient store, tough
and solid appearance, affordable, rural product
usage, environment
Electroluxs bijlee refrigerator can store power for 12
hours as back up
Urban imagery (feel and comfort)- Mahindras Maxx-
styles and finish
Chassis is designed to keep the mother board cool at
tem 45deg c
D) business alnalysis
Likely cost? Potential demand? Recovered?.
ROI?
E) product development
Approves particular product
Executed in research lab stage concept on
the paper is transformed in to a product in
hand
F) development of marketing mix
Product : packaging, colour, logo and brand
name taken at this stage
sampoorna chosen as a brand name for
televisions by LG, is a word from the four
leading languages spoken in rural Hindi, Tamil,
Marathi, Bengali.
Promotion : selecting media, punch line
TATA ACE

Price : retail price, dealer and retailer margins
are taken at this stage
TATA ACE slightly higher price that three
wheeler it enabled the customer to climb
the ladder by paying a slightly higher price
Place: TATA MOTORS conceived a concept
called 1
st
outlets for the distribution of ACE.
1
st
retail out lets that handle only sales of ACE
G) product Testing :
1) product testing : before it is formally launched
in the market Intel took the personal computer
designed for rural market
Test in pilot project changes made accordance to
it
2) concept testing : entire product concepts is
presented to the customer to have their reaction
it might be successful or not
3) test marketing done by selling the product in
limited
H) commercialisation or launch :
New product is actually launched in its target market place :
do some effort
Promotion strategy TATA Ace road show,
demonstrated test- drive, using the metaphor of
an elephant baby elephant TATA TRUCK
mother elephant
Pricing strategy : tied up with auto financer in
urban areas who offer five year financing for the
vehicle (three wheelers get only two/three year
financing
Finance companies comfort level with salary slip
than the agricultural income

Place strategy : nine state, 300 exclusive sales
outlets across India, with in a range of 50 to 100
km from their village, tied up with local garages
apart from its existing dealers,
Training to the staff of these local garages
Rural market and product life cycle
The four stages of PLC Introduction, growth,
maturity and decline
This fact remains true for the rural market as
well
Introduction to decline varies from one
product to another

PLC determined by the following factors
market condition
growth
trends in buyers spending
technological
company policy
Characteristics of different stages
of PLC and marketing mix
strategies
Introduction stages:
Growth , sales volume is low,
Product awareness is limited
Profit is unlikely
Focus on to build awareness
Establish distribution network
Marketing strategies for introductory stage
A)product strategies : small trial pack
B)place strategies: encourage to stock the
product, offer scheme
C)promotion strategies : generate greater
awareness, by educating and reaching the
opinion leader, targeting the innovators
As competition is less, highlight the benefit of
the product concept
D) pricing strategy : go for introductory price
offer,
Rapid or slow penetration can be taken on the
basis of the resources.
Growth stage
Becomes aware of the product of its benefits
Characteristics :
rapid growth in sales and profit ,
economies of scales,
lower prices are possible,
the competitors move in the market
So focus :
To build brand preference,
To increase market share
Marketing strategies for growth stages
A)product strategies :
i) brand reinforcement educating the
customer about benefits
ii)modification or value addition in the
product
iii) making the product more relevant for the
customer
iv) launching medium packaging HLL
created bubble packs shampoo- neither
sachets nor bottle
B) pricing strategies option to either
maintain or lower the price even further
economies of scale due to the significant
increase in sale
C)place strategies-strengthening relationship
with distributor, deepening the penetration
tapping some of the rural segment
D)promotion strategies- increase in
promotional budget, highlighting the quality
or performance of the product


Maturity stage
Competition becomes even more intense
Most of the product remains in this stage
globally for a considerably long time
Characteristics of maturity stage
Maximum sales and profit
Intense competition
Face tough competition - withdraw
Focus : defending the market share,
maximising the profit, tractors and chemical
fertiliser- entered maturity stage like in punjab
A) elongate the maturity stage :
Imperative to sustain the customers interest
So saves the product from entering into
decline stage
B) product strategies : by adding interesting
features,
Update the product
Being decided to market its ketchup in
different colour
Organisation need to strengthen the
perception that their product is better and
different from others, so R and D to enhance
features
C) promotion strategies
Appear novel in product promotion
Brand repositioning add new market
segments, promote how their offerings are
different and better from competitors
Promotion needs to be made broad based
potential consumers due to their
conservative attitude.
D)place strategies : deepen the distribution
network
Incentives to channel partners
E)price strategies
Lowering prices
Decline stage
It is not possible to extend the maturity stage
Tooth paste- maturity stage- but still they
cannot be considered immune from declining
stage
Washing soaps taken oven by detergent
Characteristics
Sales drop, demand diminishes, market for
product shrinks, inventories start piling up,
profit decline
Marketing strategies
A)rejuvenate the product
i) revive the product by additional features
ii) harvest the product
Sell their manufactured product at reduced
prices
Branding product for rural market
Despite create an awareness of their goods
and services still un tapped
Lifebuoy- one of the first soaps with rural
areas as the key target market- create brand
loyalty
Colgate, Bajaj, Tata adopts right set of brand
building tools- for long term
Brand
Origin- Norwegian word- brandr- means to
burn
A brand is defined as a name , term, sign,
symbol or special design or some
combination of these elements that is
intended to identify or differentiate the
goods or service of one seller or a group of
sellers (American Marketing Association)
If Mercedes Benz is a brand name- the star is a
brand mark.
All trade marks are brands and include both
the brand name and Pictorial designs- which
are legally protected
Exclusive rights to use brand granted by
trademark law, unlike patents and copy rights
which have expiry date
Brand- attributes, value, personality, culture
Brand is a complex symbol- not just a name-
identity and builds a personality around itself.
Branding process
Branding is a process, a tool, a strategy and an
orientation
The process of creating a brand stem from
research that starts with the concept of what
the product is and what its functions and
objectives are
Brand building is usually a long, tedious and
methodical work
It is not static- continuous change in product
appearance and performance
Brands is some thing which is designed by the
marketer, but which is built over time by the
consumer


Brand loyalty
the degree of consistency in buying particular
brands as a function of cognition, emotion ,
satisfaction, commitment, habit and positive
attitude towards brand
Consumer loyalty refers to the unwillingness
on part of consumer to switch over to the
other products, brands, or stores
Consumer loyalty is a board term
encompassing brand loyalty and store loyalty.
Factors determining brand loyalty

1. Emotion- emotional bond between the
customer and the brand
2. Objectivity- people who constantly reassess
their buying decisions on objective purchase
parameters
3. Inertia rarely reassess their purchase
decisions- out of involvement or high
switching costs
Satisfaction, customer relationship
management- not only this
Recency, frequency, and monetary value-
regard as good measure of customer loyalty.
Indian consumers tried on average 6.2 brands
of the same packaged good product in one
year, compared with 2.0 brands for American
consumers.
Benefits of brand loyalty for the organisation
1. Loyal customer are typically less price
sensitive than other
2. Provides firms with a valuable time to
respond to competitive action
3. Cost- attracting new customer six times
higher than the cost of retaining current
customer.

Significance of brands
Market place teeming with thousands of
product and servicing
A brand differentiates a product from similar
other products
Worlds top three brand represent
enormous capital value
Value of coca- cola (Rs 3,17,400 crores)
Microsoft 2,99,000 crores
IBM- 2,43,800 crores, BMW- 64,400 crores
Regional brands
A regional brand is need specific and unique
to a particular region
However, should not be confused with a
national brand
Mass consumption product like tea, soap,
detergent and dish washing powder have
several regional brands with loyal customers.
555 and chhokra soap strong regional
brands in punjab
Arun ice cream of Hatsun foods- third of
market share
Reasons for the success of regional brands
1. Spread of cable and satellite television
2. Understanding of the need of regional
consumers
3. Low overheads- regional brands can offer the
promise of value because of their low
overheads.
4. Legacy
5. Large regional markets- fairly homogeneous
6. One to one relationship with channel
partners.
The personal touch that the entrepreneurs are
able to provide is something that the national
level companies find it difficult to replicate.
7. Entrepreneurial spirit
Because of small- take quick decision in any
change in the consumer demand
Regional brand: success stories
Anchor toothpaste- vegetarian toothpaste
Parakh foods- gemini oil- sunflower or
Ghari Kanpur based detergent powder , no 3
just behind nirma and levers
Regional brands : competitive response of
national brands
The national brands are not serious- to moves
of the regional player
But once reach threatening to the growth
and market share of the national brand
Price cut, promotional efforts and brand
building initiatives
Half of 2003 national brand surf, colgate, tide-
battle with regional brands like Ghadi,
Anchor, Ajanta etc,
Most of the cases national brands managed to
snatch market share from the regional brand
One view is that the regional brand should not
try to emulate national leaders
Squeezed by large Indian companies on one
side and cheap imports on the other, only a
few regional brands make it big.
Regional brands can not fight the battle with
price alone- innovation, value system, faster
response, entrepreneurial spirit, lean
organisational, Rand D etc.
Brand building in rural market
Customisation
Find out the needs, wants and aspirations of
rural consumers by directing contacting them
Reengineering the product- according to need
of rural consumers
Then the entire brand building efforts has to
be built on the basis of their needs and
aspiration
Nokias 1100 promoted with caption of Made
for India
Relevance
The brand name or the punch line is in
vernacular language
The same logic applies to the colour, logo and
slogan
Celebrity not only the brand awareness spread
but it also has a good impact on over all sales
volume growth.
Media
The media selected to promote the brand is
very important
As the conventional mass media may not
prove to be very effective when used alone
select other below the line media- live
demonstration, contests
Demonstration vans with audio visual
equipments have deep rooted impact, than
the short commercial on TV
Haats can be an effective medium for rural
marketing
Message
Message should meet the rural sensibilities
With emotion touch and story line are most
effective
Commercials with gimmicky hi-tech story- not
work well
Rural consumers have strong visual sense.
Recongnition
Either does not understand english or even
illiterate
Cavinkare strategy 5 empty sachets of chic
shampoo contest by the consumer
conscious that he is buying only the chic
shampoo
Word of mouth publicity
Target the right set of opinion leaders-
develop the brand recall than the five or ten
seconds commercial on the Tv
The stories they hear from others are more
believable for rural
Crores of rupees invested in brand building
efforts can go waste- if not available at the
retailer shelf.
Branding and rural buyer
behaviour
What is the response of rural consumer
towards the brands?
In eighteen product categories consumption
of branded items accounted for about 80% of
the sales in 2005 not only national brands
also include regional and locally
manaufactured

branded goods comprise 65% of sale in
villages today and the share of non-branded
goods is shrinking dramatically
Sign that a market for premium goods is
emerging 0.9% denum talc, 0.7% shampoo
using pantene
Rural consumers recognises Parles pack of
biscuits by its yellow stripes and the baby
Youth in the family buy national brands
Senior members use regional or local or low
value national brand
Two different detergents, shampoo, tooth
paste and talcum powder might be found in a
single home
Product innovation and design
Product are classified in to 2 categories based
on nature of innovation- original, novel
product and imitation.
Original, novel product
An innovative firm will surely succeed
However, it should be careful in making
technical innovation . Ex tractors, pesticides,
fertilizers
Imitation
Imitations may result in two types
A poor imitator will end up in producing
deceptive, spurious , fake, copycat products.
On the other hand, a competent imitator may
even produce an improved version of the
original product
Product design decision
A product or a service is an offer made by a
marketer, which has the ability to satisfy the
needs and wants of customers
It can be physical and tangible
Service are intangible- soil testing, retailer
advice, training.
The key consideration in individual
product/service offers is the development of
the product at three levels
1. core product development
2. Tangible product development
3. Augmented product development

Core product
A core product provides benefits that correspond to
the need specified by consumers
What are the needs of consumers?
What kind of form and functional utilities are
consumer demanding?
A core product is one that provides important form
utility and ensure performance of the basic function
Can the tooth powder be used to keep the teeth
clean?
Tangible product
The product concept becomes visible and
operational when psychological needs are specified
in physical terms
A) quality durability, capacity, efficiency, economy,
reliability
B) features 1) rational problem solving- it is
willingness to buy solutions that leads marketers to
add features to the stripped down model 2) emotion
fancy- the second type of features are those that
capture the attention of the buyer . They are less
funtional and more fanciful.
C) design and style so as to produce an
artistic unit with functional structure and
attractive shape
A designer has to give consideration to the
functionality, aesthetics, ergonomics,
convenience of operator, ease of repair,
service and costs.
D)packaging: packaging is the process of
providing a container or wrapper for a
product. packaging is done at three level
1.primary package it hold the product, for
ex. Bottle
2. secondary it holds the primary package
(ex) cardboard box
3. shipping package : (ex) corrugated box.
E) branding it give products an identity- the
brand is a name, term, sign, symbol, design or
colour or a combination of them that helps
identity the sellers product.
Augmented product
Marketers should have the vision to look at
the specific needs of consumers and also their
related requirement
Augmentation requires fortifying the product
strategy with additional force drawn from
other Ps. as a result buying and using the
product becomes a pleasant and exciting
experience.
Unit V
Distribution trends
1. Emergence of new customer groups : more
and more price conscious consumers are
demanding the best value for the money
they spend. They are now brand conscious
and looking for exposure, explanation.
2. High media exposure: highly active media is
both boon and bane for marketers. Brands
can be build over night and can also
demolishes. The penetration of Tv, DTH-
highlighted
3. It revolution: ITC e- choupals, I-shakti of HUL,
kisan kendras in addition to internet kiosks of
entrepreneurs, have opened up new windows
for information. Seeking villagers.
4. Consumer as seller
a recent trend ushered in by HUL is the
engagement of women in rural areas as
channel participants. Earlier , Amway had
introduced network marketing in which
consumers acted as dealer.
Distribution strategy
Ensure constant availability of advertised
products in the market
In India what ever is available at the outlet,
influenced largely by the retailers advice and
recommendation
Reaching to 6 lakh villages is a distribution
nightmare
Despite increasing in the number of
consuming class- 68% of the rural market still
lies untapped primarily due to inaccessibility.

Yet some regional brands like Ghari detergent,
Anchor toothpaste and gemini oil have
achieved rural reach from MNCs like HLL,
colgate
One should know the key challenges
1)large numbers of small markets
2) dispersed population
3) poor road
4) multiple tiers( intermediaries)
5) poor availability of suitable dealers
6) low density of shop
7) inadequate bank
8) poor storage system
9) poor visibility on rural shop shelves
10) poor communication poor reach of
media.
Channels of distribution
Managing such a massive sales and
distribution network is in itself a huge task.
It is estimated that over a million market
intermediaries wholesalers, stockists,
transporters and retailers.
Urban areas have a variety of distribution
outlets, ranging from large supermarkets to
smaller retail stores.

Small shop alone are the back bone of the local retail
network
There are 5 layers of distribution channels for the
movement of products from the company depot to
the interior village markets
Layer channel location
1 company depot national/state level
2 distributor district
3 sub-distributor town
4 wholesaler large village
5 retailer village
Most companies have direct representation
up to level 3 in the form of sub- distributor
To achieve an advantage in rural markets,
marketers need to maximize direct flow and
control of stocks from layer 3 to layer 5
The last layer is the most crucial as well as the
most challenging- because existing
distribution models fails to provide of
products to the village.
FMCG distribution has the maximum channel
partners . In contrast, the durable goods
channels has fewer partners
Evolution of rural distribution
system
Historically, the rural distribution system has
included wholesalers, retailers, mobile
traders, vans and weekly haats
Wholesaling : more than 70% of the rural
market is still beyond the reach of direct
distribution- due to low density- rural market
were neglected, company distributors focused
mainly on the large number of retailers in
urban areas

Rural retail spread: rural india accounts for
65% of retail outlet in the country . Restricts
the variety and range of the products stocked.
Distributors can cover most of the larger 2000
and population villages numbering around
1,10,000
Retail premises: three out of four shops have
less than 100 sq.ft area. Constraints (lack of
sufficient space, inadequate power suppley,
lack of proper storage system, )
Rural retail shelves: products are stocked in a
cluttered and disorganized way. Slow- moving
product covered with dust. Visibility of brands
is very poor- due to the absence of proper
rack and stand
Stock turnover: the cash outlay of rural retail
outlet is extremely low. So offer- combination
of attractive margin, credit facility etc
Van: is important place in the distribution and
promotion of product. Eveready and JK dairy
use vans for distribution.
Rural mobile trades: the last mile distributors
is an age-old, direct to home, unorganized
distribution system in rural India
Haats/shandies to play a vital role in the
rural economy
Public distribution system with a network of
about 4.76 lakh FPS is perhaps the largest
distribution network of its type in the world
Co operative societies- the largest network of
cooperative in the world consisting of more
than 4 lakh cooperative .
Emerging distribution models
The SHG distribution model ( project shakthi),
satellite distribution, syndicated distribution,
the NYKS model, use of IT kiosks(e- choupal)
PDS, cooperatives, petrol pumps, agricultural
input dealers and other unconventional
channels of distribution are recent initiatives .
SHG 10-15 women , with over 10 lakh SHGs
across India. The initiatives taken by HLL,TTK
prestige and TVS mopeds
Satellite distribution (the hub and spoke
system-strong and viable model)
Syndicated distribution- 2 or more companies
come together to form a syndicated trading
organization, to jointly distribute a collective
group of household product in rural markets
by sharing distribution cost (ex) P & G to sell
with Ariel, tide etc, Cavinkare- Amrutanjan
pain balm.
NYKs haat distribution model: the Nehru Yuva
Kendra Sangathan hires young people (18-35
ages) . Pay monthly stipend of Rs 2,000.
assigned to 15-20 villages to organize
awareness camps, cultural and sport events.