RURAL MARKETING

Reference

New Perspective in Rural & Agricultural MarketingY Ramkishen

Rural Marketing Book – Pradeep Kashap & Siddhartha Raut

Cases In Rural Marketing – An Integrated ApproachCGS Krishnmacharyulu & Llith Ramkrishnan

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

What is Rural

Government agencies like IRDA (Insurance RegulatoryAnd Development Agency and NCAER (National Councilfor applied Economic Research) define Rural as villageswith a population <5000 with 75% male population engagedIn agriculture etc”

Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over the timesWas not India a so called Village/Rural for the world a couple of decades back

Census

Towns are actually rural areas but satisfyThe following criteriaMinimum Population>=500075% of the mail population engaged inNon –agri activity

RB1 Location with population up to 10000 Considered Rural Semi Urban 10000 to 100000

NABARDAll locations upto a population of 10000Will be considered Rural

SaharaAll locations having shops/establishments’Upto 10000 (not population related) areTreated as Rural

LG Elect.The rural and semi urban area is definedAs 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 RuralHence it could be aptly said that it encompasses the Activities such as developing the process to meet thisObjective – Right product at the right price to the right peopleat the right time. Exchange between rural and Urban is aFactor . 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 /abroadBetter exposure - media

Great success storiesHLL 50%Colgate 50%LG 50%Asian Paints 60%Dabur 40%Videocon 40%Cadbury’s 25%Hero Hona 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,

Ruiral 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 drinksAlmost 50% motor cyclesApprox 55% of cigarettesHalf 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 thatHas published a Guide to Indian Markets 2006Consumer durables in Indian Villages risen sharplyTV Sales up by 200%Motorcycle by 77%

There are 3000 households in rural area that earn > 50 lakhs

We have come some way ahead – but there is a long way to go

PROBLEMS

IN

RURAL

MARKETING

Low per capita income

Low disposable income

Inadequate fixed income(daily wages)

Majority – depends on AgriculturalIncomeAcute dependence on monsoonConsumption linked to harvest

Infrastructure problemsRoads, 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

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 hisAvailable resources (time,money effort) onConsumption-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

AspirantClimbers

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

StimuliInputs to any sensesProductsPackageCommercialsBrand imageReferenceInformation 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 painReliever used on animalsAfter hard days work in MPGodrej hair dye on BuffaloesTo make them look better inVillage haats in Raichur

Attitude>Consumer beliefConsumer feelings

Key

Challenges

4A

Awareness

Affordability

Availability

Acceptability

4 Ps 4 As

Promotion Awareness

Price Affordable

Product Acceptable

AvailablePlace

RURAL MARKET RESEARCH

Marketing Research is a formalized means of obtainingInformation 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 SouthVillage sizeClimate

DemographicAgeFamily SizeGenderIncomeOccupationEducationCaste

Psychographics (consists of psychological: sociology: anthropological)Lifestyle Rigid ,changing attitude, urban influencePersonality Authoritarian, Ambitious

BehavioralOccasions Regular, special occasionBenefits User status regular user, first time user, non userUsage rate Light, medium, heavyLoyalty None, medium, strongAttitude to ) positive, negative, hostileProduct )

Different variables could be used.. multilevel segmentation

Class Rural Consumer Classification1995-96 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

(not those mentioned in above 3 categories)

The Destitutes/Poor Households other than those classified above 61.40% 20.20%

Households owning any/all of the foll

wristwatch,pressure cooker,cassette recorder

transistor/radio

Source - NCAER

DEVELOP THE PROFILE

Select the Target MarketEvaluate the MarketEvaluate 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

POSITIONINGOne shoe fits all !!!! …….

Everything for Everyone !!!

It is “Something for Someone”

How to Position

USP of the product – uniqueness of the productSpecial needs – either address partially/ unaddressedNoticeable gap in the products available

Positioning Concept

Study the possible motives of the rural customerThen 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 ConceptAdvertise and Reach (Media)

Offer ProductAfter STP (Segmentation, Targeting and Positioning)

Post Sales Feedback & After Sales Service

RURAL MARKETING STRATEGY

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)

RGA

RetainGrowAdd

Purpose the market

RURAL MARKETING STRATEGY

PLANNING

EXECUTION

FEEDBACK

Profile the Rural Market

Profile the Consumer

Market Behaviour & MR

Segmentation Targeting Positioning

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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 whichawareness 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

Purchase

Post-Purchase Satisfaction

Colgate – program Operation Jagruti Switch from Charcoal to Colgate tooth powder

HLL - Free samples of LifebuoyCavin 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 requireBattery/electricity you wind it with a lever and radio runsFor approximately 30 min.

Classification

Of

Rural

Products

FMCG(HLL, Dabur, Marico, Colgate=PalmoliveCoke, 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-inputsSeeds, pesticides, tractors (Rallis India, Bayer,)

ProductLife

Cycle(PLC)

Launch

Take Off

Maturity

Decline

Points to note

Rural Products

Easy to Use After sales supportConveniently packed- success of SachetsProduct literature to be simpleHave a logo – easy to identify eg Thums Up

Rural Packaging

Packaging material –plastics, poly packs, unbreakable materialsLooks - attractive colors (like all tea companies)Size and convenience- small is beautiful

Rural Branding

1. Brand Name 2 Create Brand Identity3 Enhance Recognition 4 Build a Brand Image5 Countering Spurious brands Look alike Spell alike Duplicates

Enhancing Brand Strategies with Social PerspectiveSoaps for HygieneCooking gas for environmentCreating need by more awareness

Partnering with a long term perspective requires total belief andCommitment - 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

1. Cost –Plus Pricing = cost of product +distribution +profit2. Value Pricing (VFM-Value for Money) High Benefit3. Power Price – eg Re 1, Rs 2, 3, 5,104. Penetration Price – Introduce at low and hike price after success5. Differential Pricing –Different price for different market 6. 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-SalerTown

D

D

D

D

SD

SD

SD

SD

SD

SD

SDSD

SD

SD

SD

SD

SD

SD

SD

SDSD

R

D-dealerSD- Sub DealerR-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 bothUrban & 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 rightMessages and thereby more interaction with Potential CustomersCommunication, however, is not complete if there is no feedbackIt 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 networkSatellite Channels

Radio

Print

Cinema/Theatre

Word ofMouth

Video onWheels

Puppet Shows

Folk Theatre/Opera

Demonstration

Haats and Mela

Wall painting

Post card and posters

Booklets/Calendar

Advantages>Excellent ReachLess expensive ,wider coverage

DisadvantagesAt times unnecessary coverageNo customized messages

Companies using this mediumLevers, Onida, VideoconMahindra Tractors, Eveready

Advantages>High involvementHigh InterestLocalized administered at low cost

DisadvantagesCoverageRepeat /Re enforcementSkill of performer

Companies using this mediumBajaj, 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 theUrban Market – however, you are aware that theBusiness will grow manifold if you also cater to theRural market. (Present growth rate has been 8%. You are targeting a growth of 14%)

Present your case to the Managing Director and theBoard – How you intend going achieving the desiredObjective – with your plans for opening up theRural Market

Take into account the followingThe Target AudienceThe Product propositionDistribution Strategies and Sales ForecastPricing StrategiesPromotional Strategies

How the above strategies will help in achieving the Business Objectives.

While making the presentation – you need to be clear on1. Why you chose to launch the particular product2. Why did you chose the particular location (Opportunity Assessment)