Unit I

Introduction to rural market : Rural

market- profile- characteristics of a
rural consumer Opportunities and
challenges from rural markets- fake
encounters in 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 Yojnaproviding 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 138th 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 characteristics 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 television(53%)
sets was more than the number of
households that had toilets(44.5)
1) rural consumer is very religious
The promotional material built
around religious themes is not only
going to last longer, but will be kept
with care by the villager

 Dabur developed religious calender

Rapid success of the ganga brand
toilet soap (contained milk and it was
made from the water of ganga)- the
brand register a good response
Govinda, a cine star famous for
rural audience

2) rural consumers prefer to work hard

themselves
Would not like to be replaced by a
machine
They are less likely to spend on
products making life a bit easier

 3) strong family ties and respect for

family values
More conservative in their approach
toward the different socio, economic
issues
The loose, free flowing hair of a girl
in a shampoo or hair oil
advertisement may actually act as
barrier in 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-choupalusing 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 abroadsending 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 nonfarming 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(expens
ive,but few
different like
social productsfurniture)

Habitual buying
behaviour(low
cost, frequently
purchased
salt,soap,exception in
cigaretter- brand
preference is

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

Need
NeedRecognition
Recognition

Information
InformationSearch
Search
Cultural,
Cultural,Social,
Social,
Individual
Individualand
and
Psychological
Psychological
Factors
Factors
affect
affect
all
allsteps
steps

Evaluation
Evaluation
of
ofAlternatives
Alternatives
Purchase
Purchase
Postpurchase
Postpurchase
Behavior
Behavior

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 purchaseimportant 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 demonstrationopinion 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 progresscharcoal- cleaned teeth are a rare sightuse 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 Trus

ted 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) featurein the
top 10 andeightin the top 20.

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 cycleinnovations 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 wantinclude 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
To
To
To
To

maximise long run profit

maximise short run profit
increase market share
match competitors prices
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&fdistributors- 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 co

nsumer

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 cultureshould 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 brandadvertised 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 engineeringsubstituting 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 qualiltycheaper 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, Van based

bus stand , haat,
advertising ,
hoarding
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 1st outlets for the distribution of
ACE. 1st 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 shampooneither 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 marketcreate brand loyalty
Colgate, Bajaj, Tata adopts right set
of brand building tools- for long term

Brand
Origin- Norwegian word- brandrmeans 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 nameidentity 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 medialive 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 leadersdevelop 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 nonbranded 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 identitythe 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, DTHhighlighted

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. Slowmoving 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.