4Ps in Rural Markets

Product
Anything that has a value in exchange Product price place promotion Challenges Availability, affordability, acceptability & awareness
Marketing Tools Product Price Place Promotion Marketing Challenge Acceptability Affordability Availability Awareness

Source: The Rural Marketing Book- Kashyap. P & Raut. S

Contd

Appropriate Product Strategies

Existing & New Products Product features service quality price & performance relationship Simplicity is key Sense & Simplicity Phillips Global Campaign Urban market successes could be rural market failures Appropriate new product development processes

Product Levels

CORE BENEFIT

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT POTENTIAL PRODUCT

Contd
Product Level Core Benefit Basic Product Expected Product Characteristics Fundamental benefit/ services Example Entertainment Rural Vs Urban Same Same Appearance of differences in expectations

Benefit/service into Television Set tangibles Attributes & conditions buyers normally expect Digital sound, flat screen

Augmented Product Exceeding customer Battery Operated TV Pleasant surprise for expectations rural customer Potential Product Encompassing all augmentations & transformations Jolly Startek TV Uniquely rural value proposition

Product Development Stages

Stage
Idea Generation Idea Screening
Searching

Marketing Activities
for new product ideas

Select

the most promising ideas and drop those with only limited potential. Study the needs and wants of potential buyers, the environment and competition.
Describe

Concept Testing

or show product concepts and their benefits to potential customers and determine their responses. Identify and drop poor product concepts. Gather useful information from product development and its marketing personnel.
Assess

Business Analysis

the products potential profitability and suitability for the market-place. Examine the companys research, development, and production capabilities. Ascertain the requirements and availability of funds for development and commercialisation. Project ROI.

Product Development

Determine

technical and economic feasibility to produce the product. Convert the product idea into a prototype. Develop and test various marketing mix elements.
Conduct

Test Marketing

market testing. Determine target customers Reactions. Measure its sales performance. Identify Weaknesses in product or marketing mix.
Make

Commercialisation

necessary cash outlay for production facilities. Produce and market the product in the target market and effectively communicate its benefits.

FMCG Consumption Trends

Products Toilet Soap Washing Cake Cooking Oil Hair Oil/ Cream Tea Toothpaste Washing Powder Electric Bulb Shampoo Biscuits Health Beverages Urban( 1000 HH) 998 980 968 897 876 822 819 723 663 579 324 Rural ( 1000 HH) 992 950 952 787 758 449 576 394 352 314 67

Source: National Council for Applied Economic Research, 2002

Consumption Ranking
Rank Rural Product Urban Product Rural HH Consumption grams / month 268 950 268 302 893

1 2 3 4 5

Toilet Soap Washing Powder Packaged Tea Biscuits Detergent Cake

Toilet Soap Biscuits Washing Powder Packaged Tea Detergent Cake

Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail Consumer Panel, 2001

Rural Durable Usage Trends

NCAER has classified durables into three categories Group One( <Rs. 1000) Group Two( Rs.1000- 6000) Group Three( >6000) In group one the growth is as high as 75 percent Electrical goods show the highest urban- rural disparity, why ? Television( B & W) 195/1000HH in rural Vs 490/1000HH in urban Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban

Packaging
Associated with affordability - Convenience Consumer recognition & product protection Packaging material, size, convenience and aesthetics Example: Chik Sampoo

Corporate Responses to Fakes

Look-alikes- Spell-alikes & Duplicates Prices range from MRP to 60 % of MRP Margins range from 60 % to 300 % Legal action awareness programmes New Package Development

Fakes: Some Examples

Contd

Pricing

Issues in Pricing
Internal & external factors Selecting pricing methods Pricing adaptations Low price points Simple packaging utility around packaging material Highlighting value

Price Adaptations ( Indicative)

Product sharing services, Example: Tractors Product Bundle pricing, Example: HUL Operation Bharat Free gifts may sometimes not work in rural areas Special event pricing- Hero Honda Rs. 500 campaign

Colgate- Cibaca

Place- Rural Distribution Challenges

Large number of small markets Dispersed population and trade Poor connectivity Low availability of suitable dealers Inadequate banking/ credit facilities Poor product display and visibility Poor communication of offers and schemes

Levels of Distribution
Level Partner Company Depot/ C & FA Distributor/ Van Operator/ Super Stockist/ Rural Distributor Location National/ State level District level

1 2

Sub Distributor/ retail Tehsil HQ, towns and large Stockist/ sub stockist/star villages seller Wholesaler Retailer Feeder towns, large villages, haats Villages, haats

4 5

Distribution Adaption( Indicative)

Hub and Spoke Model, Example: Coca Cola Use of Affinity groups, Example: Project Shakti Haat Activation, Example: Colgate Syndicated distribution, Example: Cavin Care & Amrutanjan Use of marketing co-operatives, Example: Warna Bazaar in Rural Areas Mobile traders, Example: FMCG companies

Promotion- Adaptations for Rural Markets

Conventional Television Radio Non- Conventional Haat and Mela Personalised Direct mailer

Folk Media( puppet and magic POS (demonstration, leaflet) show) Video Van Mandi Word of mouth Interpersonal communication

Press Cinema

Outdoor: Wall Painting, Hoarding

Animator

Melas & Haats

Melas 1. 25,000 melas 2. Companies can concentrate on the top 100 melas 3. Pushkar Mela in Rajasthan 4. Organised by the state veterinary department 5. Product sales, promotion, demonstration and database generation 6. Cultural activities and rural sports Haat 1. Periodic markets located in larger villages(> 40,000) 2. 10 50 villages are serviced 3. Sunday markets are most popular 4. Average number of outlets is 315 and average daily sales is about Rs 2 lakhs 5. Traders participate in at least 4 haats 6. 81 percent of the visitors are repeat customers

Types of Promotions
Advertising Sales promotions coupons, contests, demonstrations and sampling, Example: Tata Shaktee Haat Hungama Direct marketing, Example: Videocon Publicity, Example: Project Shakti and AP Online Using a direct selling through a sales force, Example: Swasthya Chetna for Lifebouy

Contd
Push strategy sales force and trade promotion Pull strategy advertising and consumer promotion

Close of Session

Thank You