Segmentation, Targeting & Positioning in Rural Markets

Orientations to the Market

Selling orientation - Product orientation - Marketing

orientation C K Prahalad and V Ramaswamy Co- creating value with customers Market as a target to Market as a forum The contribution revolution Customer is the king/ queen Understanding the customer is vital The Mahatmas words at railway stations Foundation of the STP process

The STP Process

Marketing Decision Segmenting Target Marketing Actions to be Undertaken Identifying and developing profiles of market segments Evaluating segments and deciding the market coverage strategy Identifying , selecting and communicating competitive advantages

Positioning

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

Heterogeneity in Rural India

Variable Example

Socio Cultural Differences

Population Size & Density Difference in Infrastructure Media Exposure levels Literacy Levels Income levels & patterns Family Structure

Caste Based Habitations in Villages

Kerala Vs Andhra Pradesh BIMARU states Vs Karnataka Kerala Vs Orissa Himachal Pradesh Vs Bihar Farmers & Daily Wage Earners Joint Families & Nuclear Families

Segmentation: Issues & Options

Measurability- Accessibility- Differentiability &

Profitability Is it easy to measure segments in rural areas? What are the issues in accessing rural markets? Is it necessary to segment underdeveloped markets? ( need for differentiation) What is the appropriate pay back period by focusing on a segment? What should be the appropriate market targeting strategy? Mass Segment Niche Micro approaches

Basis & Approaches to Segmentation

Segmentation Criteria Geographic Relevant Variables ( Indicative) Region & SCRs Village Size and density Climate Age Gender Income: ( NCAER ) Landownership Education ( SEC Classification) Occupation ( SEC Classification) Type of home ( SEC Classification) Lifestyle Rural, Urban & Rurban Personality Occasions Benefits sought Loyalty & usage status / rate

Demographic

Psychographics Behavioral

Demographic SEC Classification

MRUC and IRS

Three variables Education of chief wage earner

durable ownership- type of house

Multi Attribute Segmentation

Thompson Rural Market Index 1. Developed by HTA Mica Rural Market Ratings 1. 42 socio economic indicators for ranking districts 2. Linear combination of six variables for measuring market potential of districts 3. Classification into A, B , C , D & E markets

2. 26 variables
3. Demographics,agriculture, electrification and banking facilities

4. Weights are given to variables

5. Data from 383 districts collected 6. Classification into A, B, C, D and E markets

Contd
Rural market ratings by RK Swamy BBDO

Lincompass by Linterland ( Lintas IMAG)

Effective Market Targeting

Segment attractiveness must match company

objectives and resources Undifferentiated marketing- Coca Cola Differentiated marketing Tractor Marketing Single segment concentration Deciding the appropriate coverage strategy Coca Cola An arms length from desire

Positioning
A distinctive place in the mind of the consumer

Identifying the unique features of the product/

service
Differences with respect to competition
Selecting differences having a greater competitive

advantage
Communicating the best advantage to the

consumer

Issues in Positioning
Attractiveness-Distinctiveness-Pre-emptive -

Affordability - Communicability
Under positioning over positioning confused

positioning

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

Class

Rural Consumer Classification

1995-96

2006=2007

The Affluent/Very Rich

Households owning

1.60%

5.60%

personal cars/jeep with other products

The Well Off Household owning any/all of the foll. 2.70% 5.80%

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

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

VCR/VCP,mixer grinder sewing m/c

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

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

bicycle,electric fans, electric iron with other durab

Source - NCAER

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

The Destitutes/Poor

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

Value to Rural Customer

Low Easy
Ease of Implementation

Hard

TARGETING

>Select Target Segment

>Formulate Market a marketing strategy for the target market POSITIONING One shoe fits all !!!! . Everything for Everyone !!!

It is Something for Someone

How to Position USP of the product uniqueness of the product Special needs either address partially/ unaddressed Noticeable gap in the products available Positioning Concept Study the possible motives of the rural customer Then figure out how to appeal to them (USP, Price Quality Uses, Class, Culture etc

 Select & Develop the Concept

Bridge gap between the product and the target market Communicate the Concept Advertise and Reach (Media) Offer Product

After STP (Segmentation, Targeting and Positioning)

Post Sales Feedback & After Sales Service

RURAL MARKETING STRATEGY

New Entrant Company starts Rural Market first & then ventures in Urban Market

ENTERINING
THE RURAL MARKET

(eg Cavin Kare Chik & Meera Shampoo) Mid- Entrant Company starts Rural Market after success in Urban Market (eg HLL, LG) Late - Entrant Company starts Rural Market after success in Urban Market for long

Purpose

R G A

Retain (eg Cadbury)market the Grow Add

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

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

Awareness Trial

Colgate program Operation Jagruti Switch from Charcoal to Colgate tooth powder
HLL Free samples of Lifebuoy Cavin Kare Free sample of Chik Champoo

Purchase Post-Purchase Satisfaction

Marico Industries Parachute coconut oil Sudhata ki pehchan smell to differentiate between real and spurious

Approaches to rural segmentation

Geographic

Demographic
Psychographic Behavioural

Targeting
Evaluation and selection of segments

Coverage of segments

Positioning
Identifying the positioning concept

Selecting the positioning concept

Developing the concept Communicating the concept

Product Strategy
Marketing mix challenges

Promotion with language barriers

Pricing constraints with urban exposure of

quality Scattered marketing

Rural Product Categories

The NCAER has categorized the consumer

goods into three categories. Category I - Products are of immediate use to the family. E.g.- bicycles, fans etc. Category II - Products are a combination of entertainment products and products that ease household work strain. E.g. - mixer grinder, cassette player etc.

 Category III

- Here products are a combination of means to

supplement income, easy household working, and source of entertainment. E.g. washing machine, motorcycle, etc.

Rural Product
Anything that has a value in exchange

Products to be marketed with the requirements of

the rural consumers should not be an exception of the urban offerings Phillips launched free power radio- does not require battery/electricity, you wind with a lever and the radio runs for approximately 30 minutes

Product goes to
Urban to rural: marketers in rural area. These

include, FMCG products, consumer durables, etc Rural to urban: these generally are middlemen, agencies, govt co-operatives etc who sells fruits, vegetables, grains, pulses and others Rural to rural: these include selling agricultural tools, cattle, carts, and others to another village in its proximity

Points to note
Rural products
Easy to use After sale support Conveniently packed- success of sachets Product literature to be simple

Have a logo- easy to identify eg. Thums up

Marketing challenges
Marketing tools Product Price Place promotion Marketing challenges Acceptability Affordability Availability Awareness

Potential product

Augmented product

Expected product

Basic product

Core product

Close of Session

Thank You