Unit5 rural marketing

RURAL MARKETING Subhajit Sanyal

PROFILE OF RURAL MARKET RURAL CONSUMER MARKETING RESEARCH RURAL MARKET RESEARCH RURAL SEGMENTATION –TARGETING & POSITIONING RURAL MARKETING STRATEGY RURAL PRODUCT RURAL PRICE RURAL DISTRIBUTION RURAL SALES FORCE MANAGEMENT RURAL COMMUNICATION TOPICS

Why should we do this course? Agriculture’s share in GDP is going down, but, India still lives in her villages Urban markets are crowded and saturated The understanding of “rural” is diffused and sometimes confusing Is “rural marketing” different from “urban marketing” ?

Session Coverage Rural India – Some definitional issues Phases/ stages in rural marketing Scope of rural marketing How is rural India changing? Schools of thought- Approaches to Rural Markets Strategic Issues & Directions in rural marketing

What is Rural Government agencies like I RDA (Insurance Regulatory And Development Agency and NCAER ( National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged In agriculture etc” Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over the times Was not India a so called Village/Rural for the world a couple of decades back Census Towns are actually rural areas but satisfy The following criteria Minimum Population>=5000 75% of the mail population engaged in Non –agri activity RB1 Location with population up to 10000 Considered Rural Semi Urban 10000 to 100000 NABARD All locations upto a population of 10000 Will be considered Rural Sahara All locations having shops/establishments’ Upto 10000 (not population related) are Treated as Rural LG Elect. The rural and semi urban area is defined As all cities other than major metros NABARD National Bank for Agriculture & Rural Dev

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

Reasons for Going Rural Size of the market Largely Untapped Too crowded Urban Market Income on the rise/disposable income Income from other than agriculture Income flow from urban /abroad Better exposure - media Great success stories HLL 50% Colgate 50% LG 50% Asian Paints 60% Dabur 40% Videocon 40% Cadbury’s 25% Hero Honda 40% Sorce ORG Marg and Fransis Kanoi

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

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

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

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

Urban & Rural Markets Per capita Income Disposable Income Literacy levels Infrastructure Communication Geographical Spread Customer has many choices Key Differences

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

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

Simple Model of Rural Consumer Behaviour Need Recognition Pre Purchase Search Evaluation of Alternatives Purchase Decision Post purchase behaviour

Factors that Influence Rural Behaviour Stimuli Inputs to any senses Products Package Commercials Brand image Reference Information cues about the characteristics of the product Perception Depends on Exposure Interpretation Eg IFB had not adequately Educated farmers about the Washing machine -they thought It was a churn for making large quantities of lassi (prosperous village of Punjab) Iodex – muscular pain Reliever used on animals After hard days work in MP Godrej hair dye on Buffaloes To make them look better in Village haats in Raichur Attitude >Consumer belief Consumer feelings

Key Challenges 4A Awareness Affordability Availability Acceptability 4 Ps 4 As Promotion Awareness Price Affordable Product Acceptable Available Place

Marketing Research is a formalized means of obtaining Information to be used in making marketing decisions Market research Issue Information Required to address Design Method of Collecting Information Manage The data collection process Analyze The results Communicate Finding and implication

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

Tool Kits Used for Rural Market Research

Tool Kits Used for Rural Market Research Faces Color Wheel Same Color – Different shades Different Color Happy ………Sad Number of Coins Ladder Playing Cards

POINTS TO REMEMBER FOR RURAL MARKETING RESEARCH

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

RURAL MARKET SEGMENTATION TARGETING & 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 Product ) Different variables could be used.. multilevel segmentation

transistor/radio wristwatch,pressure cooker,cassette recorder Households owning any/all of the foll 20.20% 61.40% Households other than those classified above The Destitutes/Poor (not those mentioned in above 3 categories) bicycle,electric fans, electric iron with other durab 44.60% 26.00% Households owning any/all of the foll The Aspirants (not those mentioned in above 2 categories) audio equip, B/W TV,geyser with other durables VCR/VCP,mixer grinder sewing m/c 22.40% 8.30% Households owning any/all of the foll The Climbers color TV with other durable (No car/jeep) A.C/Motorcycle/scooter/washing m/c 5.80% 2.70% Household owning any/all of the foll. The Well Off personal cars/jeep with other products 5.60% 1.60% Households owning The Affluent/Very Rich 2006=2007 1995-96 Rural Consumer Classification Class Source - NCAER

DEVELOP THE PROFILE Select the Target Market Evaluate the Market Evaluate the Segment size growth rate profitability accessible compatible with firm’s resources & capabilities Easy Hard Low High Ease of Implementation Value to Rural Customer

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

ENTERINING THE RURAL MARKET New Entrant Company starts Rural Market first & then ventures in Urban 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 (eg Cadbury) R G A Retain Grow Add Purpose the market

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

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 (Hyundai did with IOC and PNB and SBI subsidiaries >30% sale of Hyundai from Rural/Semi Urban areas) Awareness Trial Purchase Post-Purchase Satisfaction Colgate – program Operation Jagruti Switch from Charcoal to Colgate tooth powder HLL - Free samples of Lifebuoy Cavin Kare – Free sample of Chik Champoo Marico Industries – Parachute coconut oil “ Sudhata ki pehchan” –smell to differentiate between real and spurious

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

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

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

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

RURAL DISTRIBUTION Physical Distribution Channel of Distribution Transportation Warehousing Communication PHYSICAL DISTRIBUTION Transportation Railways, Roads ,Waterways, Animals Communication ITC using internet, Mobile users by fisherman Warehousing (Three Tier Rural Warehousing Set Up) Central/State Warehousing Cooperatives Rural Godowns

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

PLANNING FOR SALES FORCE MANAGEMENT SET THE PERSONAL SELLING OBJECTIVES FORMULATE THE SALES POLICIES STRUCTURE THE SALES FORCE SIZE OF THE SALES FORCE ASSIGNING SALES TARGETS CREATING SALES FORCE- SELECT, RECRUIT, TRAIN SALES FORCE COMPENSATION, MOTIVATION, SUPERVISION SALES COMMUNICATION & REPORTING SALES COORDINATION/SALES CONTROL

TRAITS OF A RURAL SALESPERSON Hardworking Have Empathy Enthusiastic Perseverance Knowledge Attitude Skills Willingness to work in Rural Areas Adopting to cultural differences Down to earth approach Fluent in local language Developmental approach – Create not only Communicate Common to both Urban & Rural Sales person Additional traits for making it Big in Rural Areas

The Success of Organizations depends on lot on the Sales Force They are the face of the Organization – the Ambassador They are the ones who have direct interaction with The Potential Consumer/Customer The Users The Dealers The Distributors The Retailers They are a major link to the chain and establish the link They are the ones who help in building Trust They need to break the rigid ideas and preconceived notions

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

RURAL MEDIA Mass Media (Conventional) Traditional Media (Non Conventional) T.V /Cable network Satellite Channels Radio Print Cinema/ Theatre Word of Mouth Video on Wheels Puppet Shows Folk Theatre/Opera Demonstration Haats and Mela Wall painting Post card and posters Booklets/Calendar Advantages >Excellent Reach Less expensive ,wider coverage Disadvantages At times unnecessary coverage No customized messages Companies using this medium Levers, Onida, Videocon Mahindra Tractors, Eveready Advantages >High involvement High Interest Localized administered at low cost Disadvantages Coverage Repeat /Re enforcement Skill of performer Companies using this medium Bajaj, Levers, HUL, ITC

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

Defining Rural India Town characteristics not defined Towns upto 15,000 population are considered rural Planning Commission rural not defined Population density < 400 / Sq Km 75 percent of the male working population is engaged in agriculture No Municipal corporation / board NSSO ( Census) Limitations Definition Organisation

Cont’d Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007) Population characteristics unknown Commercial establishments located in areas servicing less than 1000 population Sahara Village & town characteristics not defined All locations with a population upto 10, 000 considered “ rural” NABARD Only clarifies what are the cities All places other than the 7 metros LG Electronics

Defining Rural Marketing Function that manages all activities involved in assessing, stimulating and converting the purchasing power of rural consumers into effective demand for specific products and services to create satisfaction & a better standard of living for achieving organisational goals. Marketing products produced in rural areas to urban areas Marketing products produced in rural areas in rural markets Decisions to produce saleable farm commodities involving all the aspects of the market system or structure, both functional and institutional, based on technical & economic considerations and includes the pre & post harvest operations. Corporate Rural Marketing Definition NGOs National Commission on Agriculture

Phases in Rural Marketing Marketing rural products in rural and urban areas Agricultural inputs in rural areas “ Agricultural marketing” Farming methods were primitive and mechanisation was low Markets unorganised Phase One( Pre 1960’s) 1 Key Events & Trends Time Frame Sr. No

Cont’d Demand for consumables and durables rise Companies find growth in urban markets stagnating or falling Phase Three( 1990s to Present) 3 Green Revolution Companies like Mahindra and Mahindra, Sri Ram Fertilisers and IFFCO emerge Rural products were also marketed through agencies like KVIC Phase Two ( 1960s to 1990s) 2

Scope of Rural Marketing Keenly debated topic Definitions based on organisational/ institutional vision, mission & goals Need for a comprehensive and modular understanding Rural Marketing is a “ work in progress” Multi – disciplinary approach is necessary for sharper understanding

Domain of Rural Marketing To Rural Urban From Rural Urban Source: M. Jha, Rural Marketing- Some Conceptual Issues, EPW, 1988

Scope of Rural Marketing Urban to Rural Rural to Urban Rural to Rural Outcomes Norms Modalities Products/ services Participants Dimensions of the transaction Domain of Rural Marketing

Changes in Rural India Diverse change levers in rural India The “ pull of the cities & towns” – migration and its side effects Effect of government programmes Civil society interventions Natural & manmade disasters Slow but sure change

Transitions In Rural India Food Grain Crops On land activities Farm Activities Non –food, cash crops Livestock & fisheries Manufacturing & services

Rural Employment Patterns( Male) Source: NSSO data, Mckinsey Global Institute Study, 2004-05 8 7 Manufacturing 7 4 Construction 7 5 Trade & Hotels 8 2 Transport & Communication 67 75 Agriculture Sector Year -2004 ( % share in employment) Year – 1987 ( % share in employment)

Rural India – Population Trends Source: Census 2001 15.2 16.7 19.8 Decadal Variation 72.2 74.3 76.7 As a proportion of total population 741.6 628.8 524.0 Rural Population (in million) 1026.9 848.3 683.3 548.2 Total Population (in million) 2001 1991 1981 1971

Cont’d The joint family system is being replaced by the nuclear family system The occupational pattern shows a predominance of cultivators and wage earners Cultivators( 40.86 %) and Wage Earners( 35.28 %) according to NCAER studies (2002)

Rural Settlement & Habitation Trends Key findings from 2001 census Population density 253/ sq kilometer and total number of villages is 638, 588 Villages having less than 500 population are falling Villages having 2000 + population most prosperous What are the implications of these trends?

Cont’d Size of villages/ habitations are changing Role & influence of towns is changing Social interaction is a mix of rural and urban Let’s look at some key trends in detail

Rural Income Trends Source: National Council for Applied Economic Research, 2000 3.0 0.5 High > 1,40,000 3.9 1.2 Upper Middle 1,05,001- 1,40,000 10.4 7.1 Middle 70,001 – 1,05,000 34.8 23.9 Low Middle 35,001- 70,000 47.9 67.3 Low <= 35,000 1998-99 ( % Households) 1989-90( % Households) Income Class Annual Income ( at 1998-99 prices)

Rural Marketing- Schools of Thought Determinist School Activist School What is the right approach? Dependent on level of market development, stage in the PLC and access to resources Amul & ITC prominent examples No water-tight compartmentalisation

Strategic Issues & Directions in Rural Marketing Evolutionary Vs revolutionary changes in rural markets Role of state & market forces ICT based interventions Partnership innovations Developmental role of rural marketing Scalability & replication of rural marketing programmes

ICT in Rural Markets EID Parry Universities Agri extension Ozhwar Sandhiyes E- Choupal Agmarknet Agri Marketing Sewa Bhoomi( Karnataka) Rural Services Simputer N- Logue NIC Infrastructure Provision NGO/ PPP Private Government Category

Introduction to Rural Marketing “The first five years of the new millennium will belong neither to the urban markets which have reached saturation and where margins are under pressure not to the export markets, which suffer from inadequate infrastructure back home, and uncompetitive prices overseas. It will belong to rural marketing.”

RURAL MARKETING In the India context, the word ‘RURAL’ is so much associated with agriculture and farmers that rural marketing tends to be seen as a marketing of inputs or outputs related to agriculture.

What is Rural Marketing? Rural marketing is a function which manages all those activates involved in assessing, stimulating and converting the purchasing power into an effective demand for specific products and services, and moving them to the people in rural area to create satisfaction and a standard of living to them and thereby achieves the goals of the organization.

Rural v Urban OCCUPATION: Rural:Cultivators n few non –agricultural pursuits. Urban:manufacturing,trade,commerce,professions

Size of community Rural:open farms & small community are –vly co-related Urban:urbanity & size of community are +vly co-related

Density of population Rural:density of population is lower than urban

Mobility Rural:social mobility less.More migration from villages to town. Urban:social mobility inreases with urbanity .

System of interaction Rural:less numerous contacts per man.Predominance of personal & relatively durable relations. Urban:Greater complexity,superficiality & standarized formality in relations.

Although the melting of the urban - rural divide will take a while, this is not for want of the availability of the means but for want of the rural consumer's mindset to change; which has its own logic, which is driven by tradition, custom and values that are difficult to shed,

Attractiveness of rural market Rural markets have become the new targets to corporate enterprises for two reasons : 1. Urban market has become congested with too many competitors. 2. The market have reached a near saturation point.

Various factors which have made rule markets viable:- Large population 2. Raising prosperity 3. Growth in consumption 4. Life-style changes 5. Life-cycle advantages 6. Market growth rates higher than urban 7. Rural marketing is not expensive 8. Remoteness is no longer a problem

Now for some facts and figures. The Indian rural market today accounts for only about Rs 8 billion (53 per cent - FMCG sector, 59 per cent durables sale, 100 per cent agricultural products) of the total ad pie of Rs 120 billion, thus claiming 6.6 per cent of the total share. So clearly there seems to be a long way ahead. Time and again marketing practitioners have waxed eloquent about the potential of the rural market. But when one zeroes in on the companies that focus on the rural market, a mere handful names come to mind. Hindustan Lever Limited (HuL) is top of the mind with their successful rural marketing projects like 'Project Shakti' and 'Operation Bharat'.

Clearly the main challenge that one faces while dealing with rural marketing is the basic understanding of the rural consumer who is very different from his urban counterpart. Also distribution remains to be the single largest problem marketers face today when it comes to going rural. "Reaching your product to remote locations spread over 600,000 villages and poor infrastructure - roads, telecommunication etc and lower levels of literacy are a few hinges that come in the way of marketers to reach the rural market

In 1998 HuL’s personal products unit initiated Project Bharat, the first and largest rural home-to-home operation to have ever been prepared by any company. The project covered 13 million rural households by the end of 1999. During the course of operation, HuL had vans visiting villages across the country distributing sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs. 15. This was to create awareness of the company’s product categories and of the affordability of the products.

Khaitan fans' ad on a horse cart

The greatest challenge for advertisers and marketers continues to be in finding the right mix that will have a pan-Indian rural appeal. Coca Cola, with their Aamir Khan ad campaign succeeded in providing just that.

"Yaara da Tashan...” ads with Aamir Khan created universal appeal for Coca Cola

"Yaara da Tashan..." ads with Aamir Khan created universal appeal for Coca Cola Coca-Cola India tapped the rural market in a big way when it introduced bottles priced at Rs 5 and backed it with the Aamir Khan ads. The company, on its behalf, has also been investing steadily to build their infrastructure to meet the growing needs of the rural market, which reiterates the fact that this multinational has realised the potential of the rural market is going strength to strength to tap the same.

For HLL, a one rupee or a five rupee sachet or the Kutti Hamam (the small Hamam) helps in giving the consumers a trial opportunity. While it does help in generate volume but not in terms of values. "Till the time that volume - value equation is managed better. Ultimately, the ball lies in the court of rural marketers. It's all about how one approaches the market, takes up the challenge of selling products and concepts through innovative media design and more importantly interactivity.

Amul is another case in point of aggressive rural marketing. Some of the other corporates that are slowly making headway in this area are Coca Cola India, Colgate, Eveready Batteries, LG Electronics, Philips, BSNL, Life Insurance Corporation, Cavin Kare, Britannia and Hero Honda to name a few.

Interestingly, the rural market is growing at a far greater speed than its urban counterpart. "All the data provided by various agencies like NCAER, Francis Kanoi etc shows that rural markets are growing faster than urban markets in certain product categories at least. The share of FMCG products in rural markets is 53 per cent, durables boasts of 59 per cent market share. Therefore one can claim that rural markets are growing faster than urban markets

Satellite dish antennas reach rural India

In 2000, ITC took an initiative to develop direct contact with farmers who lived in far-flung villages in Madhya Pradesh. ITC's E-choupal was the result of this initiative.

So the fact remains that the rural market in India has great potential, which is just waiting to be tapped. Progress has been made in this area by some, but there seems to be a long way for marketers to go in order to derive and reap maximum benefits. Moreover, rural India is not so poor as it used to be a decade or so back. Things are sure a changing

Typical shop in rural India stocked with sachets, etc

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 Mahatma’s words at railway stations Foundation of the STP process

The STP Process Source: The Rural Marketing Book- Khasyap. P & Raut. S Marketing Decision Marketing Actions to be Undertaken Segmenting Identifying and developing profiles of market segments Target Evaluating segments and deciding the market coverage strategy Positioning Identifying , selecting and communicating competitive advantages

Marketer can target a market with two broad strategies. Mass Market Strategy Market Segmentation strategy Market Segmentation is the process of identifying small Markets that exists within a large market .

Levels of Market Segmentation Mass Marketing or Undifferentiated Marketing e.g. Ruf & Tuf Jeans, Segment Marketing - Cars Niche Marketing – specialize to a narrowly defined customer group – Temple jewellery for South Indian women wanting to take part in cultural programmes Local Marketing – Market around sector 44 Individual Marketing One to One Marketing Mass customization – ability to prepare on a mass basis individually designed products

Why is segmentation useful ? Segmentation helps firm tailor their marketing programs focuses an actionable and accessible set of the market. cuts of wasteful expenditures on unwanted consumers matches needs and wants of specific groups of buyers to firm’s offerings stimulates demands through multi-products for multi-segments resource allocation to segment specific marketing mix activities will be made more efficient Segmentation is a way to plan rather than explain

Bases Geographic - Rural / Urban; metropolis/city/town/village; modern retail stores/kirana stores / mandis/ haats Demographic – Age, Family Size (nuclear or joint ), gender, Income, Occupation, Education, SEC, religion, race, Nationality, social class Psychographic – Use of Psychology and demographics Lifestyle (AIO) – Nike, Benetton, * Personality – Femina – woman of substance * Values – HiDesign leather accessories – consumers who hold the value ‘style and elegance in a classical sense’ Behavioral Segmentation – next slide

Behavioral Segmentation - based on buyer’s knowledge of, attitude towards, use of, or response to a product Occasions – Marriage, Birth – Archies and Hallmark cards Benefits – In soaps - Dettol – antiseptic, Lux – Beauty User Status – Non users, first time users, potential users, regular user Usage rate – Light users, medium users, heavy users Buyer Readiness State – Cold Prospect, Hot Prospect Loyalty status – Hard Core Loyals, Split Loyals, Shifting Loyals, Switchers Attitude – enthusiastic, positive, indifferent, negative, hostile

Segmenting the Market: Nirma vs HLL Until about twenty ago, the rural market in India was considered a homogenous decade of the 1980s was a significant one for Hindustan Level Ltd (HLL), when the giant and undisputed market leader in detergent (Surf) in Indian Suffered significant losses at the hands of a new and small firm , Nirma Chemicals . Nirma immediately caught th fancy of the middle and lower-income customers, who were finding it difficult to make both ends meet with their limited monthly income. Nirma was the lowest –priced branded washing powder available in grocery and co-operatives stores. The middle class house wife was happy as she could choose a lower priced washing powder against Surf, Which was beyond her budget Around 1984 , HLL decided to take a fresh look at the market. Research conducted across the country revealed that different income groups of consumers had varying expectorations from detergent and washing powder. Thus, to counter the attack from Nirma, HLL launched Sunlight (Yellow), Wheel (green) and Rin (blue) detergent powders for different market segments. This strategy of segmenting the market helped HLL win back part of its lost market.

Segmenting the Markets T-Series introduced audiocassettes at unbelievably low price and took away a huge share from the market leader HMV. Cavin Kare studied the Shampoo market and came out with Chik Shampoo priced at 50 paisa per sachet and the brand became an instant hit in rural areas. Titan has introduced Sonata brand watches; priced between Rs 350/- and Rs.800/- to meet the requirement of price sensitive rural and semi urban consumers.

Utsav Time Asian Piants Ltd(APL) is India’s largest paints company and ranks among the top ten decorative coating companies in the world today. The company has come a long way since its small beginning in 1942. APl was the first Indian company to go rural In 1999 It launched Tractor enamel paint in rural markets, rural customers started using it to paint the horns of their bullock. APL survey the rural markets extensively with the able support of its advertising agency Ogilvy outreach. They found that there was a gap in demand in the market for paints used for houses. These were two choice available for rural people : the traditional chuan powder, which cost around Rs9 per kg and enamel paint which cost around Rs 50 per liter was very expensive for most rural customers. Chuan powder however was not long lasting . Hence APL launched Utasv distemper exclusively for rural markets in 1999. Utsav is good example of brand that used excellent STP for rural markets.

Segmentation Variables Geographic Variables Demographic variables Psychographics Variables Product Related Variables Segmentation variables are the parameters and characteristics of people comprising total market for o product category on which can segment them into groups.

Conditions fro Effective Market Segmentation 1.Measurable 2.Accessible Profitable Data Availability Customer Oriented Philosophy Enables Tailoring of marketing Programme Enables Development of strong positioning of Brand

Approaches for segmentation the rural market of India Based on Size of Village Population (The size of population residing in a village is a significant factor which determines the overall potential demand for a product or service in that village) Population No.of Villages % of total Villages Less than 200 114,267 17.9* 200-499 155,123 24.3* 500-999 159,400 25.0 1,000-1,999 125,758 19.7 2,000-4,999 69,135 10.8** 5,000-9,999 11,618 1.8** 10,000& above 3,064 0.5** Note:* Hardly any shop in these 2.7 lakh village ** 13% of villages falling in the last three categories account 50% rural population and 60% rural wealth.

Based on Location with Respects to Nearby Town Villages Near Urban Centers. Villages in Developing Districts Immobile and self sufficient Asiatic Villages

Based on Size of Farmland Marginal Farmer :holding upto 1.0 hectare Small Framer :holding 1.0-2.0 hectare Semi-medium :holding 2.0-4.0 hectare Farmer: Medium Farmer : holding 4.0-10.0 hectare Large Farmer :holding 10.0 hectares and above

Rural Market Segmentation Tools Thompson Rural Market Index. Mica Rural Market Rating Linquest Indian Market Demographic Business Intelligence Unit Lincompass ARCVIEW

Heterogeneity in Rural India Variable Example Socio – Cultural Differences Caste Based Habitations in Villages Population Size & Density Kerala Vs Andhra Pradesh Difference in Infrastructure BIMARU states Vs Karnataka Media Exposure levels Kerala Vs Orissa Literacy Levels Himachal Pradesh Vs Bihar Income levels & patterns Farmers & Daily Wage Earners Family Structure 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 Relevant Variables ( Indicative) Geographic Region & SCRs Village Size and density Climate Demographic Age Gender Income: ( NCAER ) Landownership Education ( SEC Classification) Occupation ( SEC Classification) Type of home ( SEC Classification) Psychographics Lifestyle – Rural, Urban & “Rurban” Personality Behavioral Occasions Benefits sought Loyalty & usage status / rate

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 Mica Rural Market Ratings Developed by HTA 26 variables Demographics,agriculture, electrification and banking facilities Weights are given to variables Data from 383 districts collected Classification into A, B, C, D and E markets 42 socio – economic indicators for ranking districts Linear combination of six variables for measuring market potential of districts Classification into A, B , C , D & E markets

Cont’d 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

Reference New Perspective in Rural & Agricultural Marketing Y Ramkishen Rural Marketing Book – Pradeep Kashap & Siddhartha Raut Cases In Rural Marketing – An Integrated Approach CGS Krishnmacharyulu & Llith Ramkrishnan

Unit5 rural marketing

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