RURAL MARKETING
PROF. SHEETAL CHHABRA
RURAL MARKETING
PROF. SHEETAL CHHABRA
What is RuralGovernment 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
CensusTowns are actually rural areas but satisfy The following criteria Minimum Population>=5000 75% of the mail population engaged in Non –agriculture activity
RB1Location 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) are Treated 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 /abroad
Better exposure - media
Great success storiesHLL 50%Colgate 50%LG 50%Asian Paints 60%Dabur 40%Videocon 40%Cadbury’s 25%Hero Honda 40%
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 basisReputed Companies helping in changing lifestyles – Levers Britania ,Dabur, LG, Honda,VideoconMedia creating an impact-creating awareness levelsGovernment Policies – White Revolution – Milk products Yellow Revolution (poultry and edible oils) Blue Revolution – Aqua cultureEmployment Schemes – JRY(Jawahar Rojgar Yojna, PMRY,Small Industries Training, Ruiral Electrification, Spend on Health and Sanitation, Medical and Health, Primary Education,Credit card for farmersWaiver 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, lades, salt, toothpowder
Coca Cola is growing over 35% in Rural areas compared to Over 22 % in UrbanAccording 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 languagesGeographic 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 ManagersOccupation – 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 ClassThe Middle ClassThe 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
ExposureInterpretation
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 boothsTea Stalls Playgrounds/schoolsChaupals (meeting point old/middle aged/ influential)Haats & MelasInfluence Group
Secondary Sources
Government website www.censusindia.com www.indiastat.com www agroindia.comPrivate 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 sizeClimateDemographicAgeFamily SizeGenderIncome, Occupation, Education,CastePsychographics (consists of psychological: sociology: anthropological)Lifestyle Rigid ,changing attitude, urban influencePersonality Authoritarian, AmbitiousBehavioralOccasions Regular, special occasionBenefits User status regular user, first time user, non userUsage rate Light, medium, heavyLoyalty None, medium, strongAttitude to Product ) positive, negative, hostile
Source - NCAER
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
(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
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 PositionUSP of the product – uniqueness of the productSpecial needs – either address partially/ unaddressedNoticeable gap in the products availablePositioning ConceptStudy the possible motives of the rural customerThen figure out how to appeal to them(USP, Price Quality Uses, Class, Culture etcSelect & 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
RURAL MARKETING STRATEGYPLANNING
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 MARKETINGDevelopmental 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 Hyundai from Rural/Semi Urban areas)
Colgate – program Operation Jagruti Switch from Charcoal to Colgate tooth powder
Awareness
Trial
Purchase
Post-Purchase Satisfaction
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 runs For 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 Branding1. Brand Name 2 Create Brand Identity3 Enhance Recognition 4 Build a Brand Image5 Countering Spurious brands Look alike, Spell alike, DuplicatesEnhancing 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 PRICEPricing 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 PRICING1. 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 WarehousingCooperatives
Rural Godowns
WHY CHANNELS OF DISTRIBUTIONGeographical 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 ShopsSupply Chain Stores Rural Super MarketSmall companies tie up with large companies – Leverage/Syndicate Distribution network of Marico to sell Tide by P&GSatellite 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
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 networkSatellite Channels
Radio
Cinema/TheatreWord ofMouthVideo onWheels
Puppet Shows
Folk Theatre/Opera
Demonstration
Haats and Mela
Wall painting
Post card and posters
Booklets/Calendar
Advantages>Excellent ReachLess expensive ,wider coverageDisadvantagesAt times unnecessary coverageNo customized messagesCompanies using this mediumLevers, Onida, VideoconMahindra Tractors, Eveready
Advantages>High involvementHigh InterestLocalized administered at low costDisadvantagesCoverageRepeat /Re enforcementSkill of performerCompanies using this mediumBajaj, 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%)
Take into account the followingThe Target AudienceThe Product propositionDistribution Strategies and Sales ForecastPricing StrategiesPromotional StrategiesHow 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)