rural marketing project marketing strategy

8/8/2019 Rural Marketing Project Marketing Strategy

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Topic - Rural Marketing Project

The rural marketing project....in The my topic is colgate n colgate tooth powder wt

v gt it in the rural places....the cheap once like the 5rs wala...the project should

include all the 4p's used by the colgate ppl to market their product in the rural

place...it shuld also include the strategies used by thm..the ways thy cn inprove n all

the possible way....it shuld also hv a background of colligate n rural market....



Rural Marketing

Quite clearly, large Indian companies have begun looking at rural markets seriously.

Some of them are even developing exclusive marketing strategies to tap this huge mass of

consumers. Of India's one billion plus population, nearly 70 per cent live in non-urban or

rural areas. According to a National Council for Applied Economic Research (NCAER)

study, there are as many "middle income and above" households in rural areas as there

are in urban areas. There are almost twice as many "lower middle income" households in

rural areas as in urban. According to NCAER's projections, the number of middle and

high-income households in rural India is expected to grow from 80 million to 111 million

by 2007. In Urban India, the same is expected to grow from 46 million to 59 million.

Hence the absolute size of middle and high income households in Rural India is expected

to be nearly double that of Urban India.

Percentage Distribution of household population and income

HOUSEHOLDS POPULATION I NCOME

Rural 73.6 74.6 55.6

URBAN 27.4 25.4 44.4

ALL I NDIA 100 100 100

Thus we see that Rural India contributes almost 56% to the National Income as against

44% contributed by Urban India. Although it is contributed by 76% of the total

population, which has its own challenges like how to sell small quantities to large base of

consumers.

PERCENTAGE OF POPULATION BELOW POVERTY LINE BY R URAL-URBAN LOCATION STATE WISE

(2009-2010)

STATES R URAL URBAN

ALL-I NDIA 36.35 28.76

A NDHRA PRADESH 25.48 32.28

ASSAM 61.78 12.48



BIHAR 58.85 45.10

GUJARAT 26.22 21.70

HARYANA 14.86 13.79

Karnataka 38.50 24.55

K ERALA 26.50 31.89

MADHYA PRADESH 39.35 46.29

MAHARASTRA 50.00 32.16

ORISSA 62.67 34.27

PUNJAB 14.24 6.74

R AJASTHAN 15.01 24.36

TAMIL NADU 39.37 29.82

UTTAR PRADESH 29.87 36.39

WEST BENGAL 55.16 16.74

In terms of poverty, unemployment and level of development rank of India in:

1947 86

1990 123

2010 136

out of 156 countries

Thus the Situation has further worsened as per the Report on Human Development Index.

DIAGNOSIS OF THE FAILURES

The apparent disparity requires introspection to identify the gaps, which can then be

bridged between rural & urban India.

1 LOW PRIORITY TO AGRICULTURE

Relative share (%) of agriculture to total GDP



SECTOR 1950-

51

1995-96

Agriculture 56 29

MANUFACTURING 15 29

TRANSPORT & TRADE 11 20

BANKING 9 11

ADMINISTRATION (SERVICES) 9 11

Growth rates in different sectors of economy

Particulars 1990-

91

91-

92

92-

93

94-95

Growth in real GDP % 5.2 1.1 4.3 4.3

GROWTH IN AGRICULTURE PRODUCTION % 3.0 -1.9 2.9 2.9

GROWTH IN INDUSTRIAL PRODUCTION % 8.3 0.6 2.3 4.1

Subsistence Orientation Of Agriculture

a. Productivity is low

b. Not enough value addition

c. Land degradation

3 FAILURE OF LAND R EFORMS

d. Failure of redistribution of land in favor of poor.

e. Large numbers of workers dependent on agriculture leading to low labor

productivity.

f. Splitting of families and rise in population has shrunk the size of

operational land holding.

g. Landlessness is increasing forcing more and more people joining labor

market every year.



4 INADEQUATE FOOD SUPPLIES

a. At national level India is self-sufficient but inadequate at the household

level.

b. Increase in food production mainly due to few crops like wheat & rice but

production of bajra, barley etc has declined considerably (as these are the

corps used by poor in rural India).

5 SLOW GROWTH OF INFRASTRUCTURE

a. Still 40% of India’s villages are without proper roads.

b. 1.8 Lac villages do not have primary schools within 1 km.

c. 4.5 Lac villages have drinking water problem.

6 INADEQUATE INPUTS

a. Research extension systems are weak, no direct link between scientists

and farmers.

b. Problems faced in the timely availability of improved seeds, fertilizers and

pesticides in required quantity.

c. Credit is major constraint, which adversely affects adoption of new

technologies especially by the small farmers.



7 SLOW DOWN OF R URAL INDUSTRIALIZATION

The rural industrialization has slowed down although the expenditure on rural industries

increased from Rs.42/- crores (1st plan) to Rs.6334/- crores (8th plan). However %age of

allocation decreased from 2.1% to 1.6%.

Plan outlay on rural industrialization (Rs. Crore)

PlanPUBLIC SECTOR

OUTLAY

R URAL

I NDUSTRY

%

I 1960 42 2.1

II 4672 187 4.0

III 8577 241 2.8

A NNUAL PLAN 6628 126 1.9

IV 15779 293 1.9

V 39426 592 1.5

A NNUAL PLAN 12601 289 2.3

VI 97500 1780 1.8

VII 180000 2753 1.5

VIII 434100 6334 1.6

Rural Marketing: A silent revolution is sweeping the Indian countryside. It has compelled

marketing whizkids to go rural. The marketing battlefield has shifted from the cities to

the villages. “Go Rural” seems to be the latest slogan.



FMCG COMPANIES IN RURAL MARKETS

INTRODUCTION

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods

(CPG), are products that have a quick turnover, and relatively low cost. Consumers

generally put less thought into the purchase of FMCG than other products. The absolute

profit made on a FMCG product is less; however they are generally sold in high numbers.

Hence profit in FMCG goods generally scales with the number of goods sold, rather than

the profit made per item.

The classification generally includes a wide range of frequently purchased consumer

products including: toiletries, soaps, cosmetics, teeth cleaning products, shaving products,

detergents, and other non-durables such as glassware, bulbs, batteries, paper products and

plastic goods. The category may include pharmaceuticals, consumer electronics and

packaged food products and drinks, although these are often categorized separately.

The Indian FMCG sector is the fourth largest sector in the economy with a total

market size in excess of US$ 13.1 billion. It has a strong MNC presence and is

characterized by a well established distribution network, intense competition between the

organized and unorganized segments and low operational cost. Availability of key raw

materials, cheaper labor costs and presence across the entire value chain gives India a

competitive advantage.

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4

billion in 2015. Penetration level as well as per capita consumption in most product

categories like jams, toothpowder, skin care, hair wash etc in India is low indicating the

untapped market potential. Burgeoning Indian population, particularly the middle class

and the rural segments, presents an opportunity to makers of branded products to convert

consumers to branded products.

Growth is also likely to come from consumer 'upgrading' in the matured product

categories. With 200 million people expected to shift to processed and packaged food by

2010, India needs around US$ 28 billion of investment in the food-processing industry.



NEED OF FMCG IN RURAL AREAS

After years of growth derived primarily from the urban markets, the FMCG companies

have now realized that India lies in its rural villages. So much so that rural marketing has

become the latest marketing mantra of most FMCG majors. With extensive competition

not only from MNCs but also from the numerous regional players and the lure of an

untapped market has driven the marketers to chalk out bold new strategies for targeting

the rural consumer in a big way. To gauge the extent of shift in focus of the FMCG giants

just sample this: recently did something that it hadn't done before; it introduced smaller

pack sizes of some of its soaps and put them on the market for Rs 5. And FMCG giant

PG has just launched a green variant of Lifebuoy soap, which, it hopes will be a winner

in the rural areas. Also, don't be too surprised if you village folk having their hair washed

and dyed as they are only taking advantage of the live demonstrations conducted by

Chennai-based CavinKare Products. So it is clear that rural markets have caught the eyes

of FMCG marketers and it is being targeted through experiments in a big way.

Over 70% of India’s 1 billion plus population lives in around 627,000 villages in rural

areas. This simply shows the great potentiality rural India has to bring the much-needed

volumes and help the FMCG companies to bank upon the volume–driven growth. Also,

the rural market has been growing steadily over the years and is now bigger than the

urban market for FMCG’s (53% share of the total market) with an annual size in value

terms currently estimated at around 50,000 crores. It is a definite boon in disguise for the

FMCG majors who have already reached the plateau of their business curve in urban

India and are desperately seeking new ways to increase sales.

To drive home the potential of rural India just consider some of these impressive facts

about the rural sector. As per the National Council for Applied Economic Research

(NCAER) study, there are as many 'middle income and above' households in the rural

areas as there are in the urban areas. There are almost twice as many 'lower middle

income' households in rural areas as in the urban areas. At the highest income level there

are 2.3 million urban households as against 1.6 million households in rural areas.

According to the NCAER projections, the number of middle and high-income households

in rural India is expected to grow from 80 million to 111 million by 2007. In urban India,



the same is expected to grow from 46 million to 59 million. Thus, the absolute size of

rural India is expected to be double that of urban India. But despite the high rural share in

these categories, the rural penetration rates are low, thus offering tremendous potential

for growth.

Thus it becomes amply clear that rural India has to be the hot target in future for FMCG

companies as it presents a plethora of opportunities, all waiting to be harnessed. Many of

the FMCG companies are already busy formulating their rural marketing strategy to tap

the potential before competition catches up. All biggies in the industry be it PG, Marico,

Colgate-Palmolive or Britannia, are showing deep interest in rural India. However not

everything is all rosy and there exist some gray areas in the rural strategies also.

DEVELOPING EFFECTIVE RURAL MARKETING STRATEGY

The winning strategy is to focus on the core competency such as technological expertise

to design specific products for the rural economy. The most remarkable example in this

context is the launch of sachets which has transformed the rural market considerably as

packaging in smaller units and lesser-priced packs increases the product’s affordability.

Also companies like PG and Nestle who have adopted this strategy have benefited

tremendously. Another case is of Britannia with its Tiger brand of low priced and

conveniently packaged biscuits becoming a great success story in rural markets.

Along with the cultural dynamics, the needs and latent feelings of the rural people have to

be well understood before launching products in rural segments. Marketers would do well

to first understand this and then designing products accordingly. For example, Cadburys

has launched ChocoBix, a chocolate flavored biscuit which is based on the consumer

insight that rural mothers opt for biscuits rather than chocolates for their children.

Another very important factor that needs to be looked at is the proliferation of spurious

products. Rural masses are illiterate people and they identify a product by its packaging(color, visuals, size etc.). So it becomes very easy for counterfeit products to eat into the

market share of established reputed brands. The retailer also gets a larger profit on selling

the counterfeits rather than the genuine products and hence is biased towards the fakes.

Brands such as "Jifeboy", "Bonds Talcum", "Funny & Lovely" etc., which are doing the

rounds of rural markets, pose considerable challenge to rural marketers.



The rural market remains quite price-sensitive and thus squeezing costs at every stage is

of vital importance. Some FMCG giants like PG are in process of enhancing their control

on the rural supply chain through a network of rural sub-stockists, who are based in the

villages only. Apart from this to acquire further edge in distribution PG has started

Project Shakti in partnership with Self Help groups of rural women. A very significant

step for change could be an effort to directly tap the haats, mandis, melas and local

bazaars which provide an opportunity of promoting the brand in front of a large

congregation of rural consumers.

Finally an effective rural strategy for FMCG companies must include the use of

traditional media for creating awareness about their products in the rural markets. The

traditional media, with its effective reach, powerful input and personalized

communication system will help in realizing the goal. The advantages of traditional

media which make it a powerful marketing communication channel are: accessibility is

high, it involves more then one sense, interest arousal capability is high and minimum

cost. Brooke Bond Lipton India Ltd (BBLIL) markets its rural brands through magic

shows and skits.

Barring a few, notable exceptions, rural marketing in India is still about a van campaign,

a badly-made commercial, a few painted walls and the occasional participation in village

haats and melas. But then, "rural" means different things to different people: from

500,000 people for consumer durables, to less than 50,000 for fast-moving consumer

goods. Still, it is heartening to note the increasing awareness of the importance of rural

markets - or, at least, of companies wanting to move beyond urban boundaries.

According to estimates by the Rural Marketing Agencies Association of India, the total

budget for rural marketing is only about Rs 500 crore (Rs 5 billion), compared to the over

Rs 13,000 crore (Rs 130 billion) allotted to mass media. This is grossly inadequate to

cover the huge potential for different products in rural markets. Of course, clients'

reluctance to spend big money for bigger results in rural markets is because there are no

standard performance yardsticks for judging the efficacy of the rural marketing efforts.

Companies like Cavin Kare (Chik Shampoo, Meera Herbal Powder, Fairever Cream and

so on), Anchor (100 per cent vegetarian toothpowder), Ghadi detergent powder and



Power soap are proof that regional brands can become brands to reckon with. And don't

forget Nirma, the most enduring example of a brand that began as a regional player and is

now a giant.



COLGATE PALMOLIVE INDIA LTD.

“Foaming at the mouth”

The offers from each of the warring side has been aimed at avoiding dilution in market

share as a result of the ongoing dispute between the two. Such offers, in the past, enabled

companies to boost volumes and thus the market share till the scheme lasted.

Further in an advertisement, Colgate-Palmolive announced the one-for-one scheme for all

its 100 gm toothpaste brands- Colgate Dental, Colgate Fresh Mint, Colgate Gel

Blue/Red, Colgate Fresh Stripe Gel, Colgate Calciguard and its premium brand

Colgate Total.

The protection of the environment and the health and safety of our customers, our people

and the communities in which we live and operate is an integral part of Colgate-

Palmolive's mission to become the best truly global consumer products company. We are

committed to conducting ourselves in a socially responsible manner and to keeping our

business operations environmentally sound. It is our worldwide policy to manufacture

and market our products and operate our facilities so that we comply with or exceed

applicable environmental rules and regulations. The health and safety of our customers,

our employees, and the communities in which we operate must be paramount in all we

do.

These concerns have been translated into the following guiding principles:

Products

Colgate-Palmolive will provide the public with safe and effective products and will strive

to produce products that have the lowest practical impact on the environment.

Packaging

To reduce the impact of our product packaging on the environment, we will work to

improve the environmental compatibility of all our packaging materials. Colgate endorses

the worldwide hierarchy of solid waste management: source reduction; recycling

(including reuse); incineration; and landfilling.



Facilities

Colgate-Palmolive is committed to the health and safety of our employees and the

communities in which we operate, as well as the protection of the environment. We will

establish and maintain programs for the operation and design of our facilities that meet or

exceed applicable environmental, health and safety laws and regulations.

Business

Colgate-Palmolive will consider environmental, health and safety issues in all significant

business transactions, including acquisitions, divestitures, discontinuance of operations,

and entry into joint ventures. We will also act in a responsible manner with respect to the

environmental protection of the lands under our management and ownership.

COLGATE PALMOLIVE - CIBACA TOOTHPOWDER

Client: Colgate Palmolive

Product: Tooth Powder & Tooth Toothpaste

Colgate Palmolive - Oral Hygiene Products

Colgate Palmolive is the market leader in the Indian oral care market, with a 51% market

share in the toothpaste segment, 48% market share in the toothpowder market and a 30%

share in the Tooth Powder & Tooth Toothpaste market. Presently it is facing competition

from no. 2 player PG and more recently from small local players (Meswak, Babool,

Anchor) and other MNC's such as Smithkline (Acquafresh). The future strategy of the

company in Oral Hygiene Products for 2009-10 on the basis of 4 P's would be:

Product: CP would come up with another strong brand name other than Colgate and

Cibaca. I would recommend for a new product development and emphasize on R&D. I

would try to position some innovative toothpaste with a brand name other than Colgate

but under the umbrella of Colgate Palmolive. In toothpowder, I would endorse the

development of 'Colgate Ayurvedic Toothpowder' focused toward rural rich and

consuming class. I would come up sachets of these Tooth Powder & Tooth Toothpaste

and position toward rural population who buy in smaller lots. For Urban population, I

would come up with the products suiting to young generation. For Urban rich and



consuming class, I would come up with the products on the basis of functional benefits.

E.g. I would expand Colgate Herbal brand to herbal clove flavor, herbal lime and mint

flavor etc. For tooth powder, I will concentrate on functional benefits and would launch

different tooth powders for different age groups. I would also launch a special toothpaste

and tooth powder for kids in the age group from 4-10 years.

Price: The price would largely be based on the competitor's price. From the niche

products e.g. Colgate herbal, Colgate Blue etc, I would charge higher premium than the

generic dental white crème that would be focused on consuming and lower income

classes. The pricing would be done on the basis of price points and the packaging would

be customized on the basis of price points.

Promotion: I would be positioning Colgate dental white crème and toothpowder towards

rural rich segment. For rural consuming class I would be endorsing Cibaca toothpaste.

Most of the promotional expenses would be T.V. media as it would have better reach to

both urban and rural population by 2009-10. Apart from T.V., FM radio for urban

population and MW and SW radio would also be used for promotion towards rural

population. For urban population hoarding on national highways outside the metros

would provide better eye catch.

Place: I would try to increase product penetration to rural population as by 2009-10 the

rural population who is rich and consuming class would be 209Mn which is not much

lesser than urban rich and consuming population of 253Mn people. I would try to

increase the wholesalers to smaller towns and would track the distribution path so that

they are covering all the village areas around the towns.

COMMUNICATION STRATEGY

Pitched against low priced products using Colgate lineage and the resultant global quality

assurance at the same price point

A well planned mobile marketing activity, which included interactive product oriented

game, an edutainment film using well know TV stars of Karnataka, besides product

sampling, sales and placement



Result

Awareness for the brand has increased multifold and is reflected in the spontaneous

increase in sales.

TOOTHPOWDER MARKET PICKING UP

The company had undertaken a 17% price cut in flagship toothpowder brand Colgate

Dental Cream (CDC) in the first quarter and a substantial price reduction of Colgate

Cibaca in the second half. These reductions affected about 65% of the sales in FY10.

Despite the lower value growth due to price reductions, Colgate has been able to grow

volumes in the toothpowder segment in FY10. Toothpowder volumes grew by 3.5%

during the year as against an 8.3% decline in FY09. The growth trend in first five months

of 2010 reveal a robust 7.9% growth in volumes as against a 5.1% decline during the

same period.

Successful launches

The company launched ‘Colgate Herbal White’ in the toothpowder range and ‘Colgate

Motion Kids’ India’s first battery powered tooth powder for kids in the Tooth powder

category during the year. New launches in the personal care portfolio include Palmolive

Aroma range of Toilet Soap, Liquid Hand Wash, Shower Gel and Talcum Powder. These

have also contributed to the volume growth.

Strategy

• Colgate plans to focus on strengthening dominance and reignite growth in core oral

care business. The strategy would be to defend and grow base business and improve

share in fast growing LPP segment.

• The company plans to build preference for Colgate Cibaca by leveraging on ‘Colgate’

equity and matching prices of competitors to aggressively to counter LPP threat. The

company plans expand market by using local press to communicate value and through

micro targeting within key LPP states.

Over the long term, Colgate plans build a strong presence in emerging PCP (Personal

Care Products) liquids categories. While this is small segment, the company expects the



category to grow sharply over the next 5-10 years and it would emerge as an important

business in future. Personal products currently account for 7% of revenues.

TOOTHPOWDER MARKET PICKING UP

The company had undertaken a 17% price cut in flagship toothpowder brand Colgate

Dental Cream (CDC) in the first quarter and a substantial price reduction of Colgate

Cibaca in the second half. These reductions affected about 65% of the sales in FY10.

Despite the lower value growth due to price reductions, Colgate has been able to grow

volumes in the toothpowder segment in FY10. Toothpowder volumes grew by 3.5%

during the year as against an 8.3% decline in FY09. The growth trend in first five months

of 2010 reveal a robust 7.9% growth in volumes as against a 5.1% decline during the

same period.

Successful launches

The company launched ‘Colgate Herbal White’ in the toothpowder range and ‘Colgate

Motion Kids’ India’s first battery powered tooth powder for kids in the Tooth powder

category during the year. New launches in the personal care portfolio include Palmolive

Aroma range of Toilet Soap, Liquid Hand Wash, Shower Gel and Talcum Powder. These

have also contributed to the volume growth.

Strategy

• Colgate plans to focus on strengthening dominance and reignite growth in core oral care business. The

strategy would be to defend and grow base business and improve share in fast growing LPP segment.

• The company plans to build preference for Colgate Cibaca by leveraging on ‘Colgate’ equity and

matching prices of competitors to aggressively to counter LPP threat. The company plans expand

market by using local press to communicate value and through micro targeting within key LPP states.

Over the long term, Colgate plans build a strong presence in emerging PCP (Personal Care Products)

liquids categories. While this is small segment, the company expects the category to grow sharply over the

next 5-10 years and it would emerge as an important business in future. Personal products currently account

for 7% of revenues.

MARKETING MIX FOR COLGATE PALMOLIVE INDIA LTD

Colgate Palmolive is the market leader in the Indian oral care market, with a 51% market

share in the toothpowder segment, 48% market share in the toothpowder market and a



30% share in the tooth powder market. Presently it is facing competition from no. 2

player PG and more recently from small local players (Meswak, Babool, Anchor ) and

other MNC's such as Smithkline (Acquafresh ). The future strategy of the company in

Oral Hygiene Products for 2009-10 on the basis of 4 P's would be:



from members of the dental profession nominated by the Indian Dental Association.

Education is imparted with the aid of audio-visuals and printed literature created by the

company. Free dental health care packs, including samples, are also distributed by the

company to encourage the practice of oral hygiene.

Teachers Training Program is an integral part of the School Dental Health Program,

conducted regularly across the country to promote preventive dental health care.Colgate

also has launched its first-ever online school curriculum featuring fun and entertaining

activities.

The Colgate top management met up with the Analyst community in Mumbai yesterday

to discuss FY03 results. Managing Director Graeme Dalziel made a detailed presentation

on the oral care category, Colgate’s performance and company’s strategy for the

business.

SLOWDOWN IN INDUSTRY

The oral care market degrew by 9% in 2002-03 in value terms. The urban toothpowder

market witnessed a 3.8% decline, while the rural market degrew by 6.2%. An analysis of

the degrowth trend revealed that almost 69% of the drop in urban consumption was due

to decline in consumption of toothpowder, while 31% was attributed to partial shift of

consumers from toothpowder to toothpowder. In the rural markets, 67% of the declinewas attributed to drop in consumption. 6% of decline was due to partial shift to tooth

powder, while almost 18% of decline was due to total shift to Toothpowder. Over 9% of

decline in volumes was attributed to consumers exiting from the category itself and

moving back to traditional dentrifices.

COLGATE IMPROVES MARKET SHARE

Despite the slow down Colgate has managed to improve market share in all the three

categories viz. Toothpowder (+1.2%), Toothpowder (+1.1%) and Toothbrush. (+0.4%)

CHANGE IN MARKETING STRATEGY

Colgate has taken an average price cut of 17% on its toothpowder brand portfolio, in a

bid to spur volume growth in the category. This is a major strategy change as compared

to the promotion driven marketing being undertaken previously, which failed to generate



the anticipated growth. Although adspend in absolute terms has been lowered by 20% at

Rs1.85bn, Colgate has managed to up its share of voice in the toothpowder category from

43.1% in FY09 to 51.3% in FY10, reflecting that category ad spend have gone down

significantly.



MARKETING STRATEGY

Define rural marketing

Rural Marketing today has changed the dynamics of the business. As the consumers are

getting informative, the business is becoming competitive day-by-day. Marketers are

seeking fresher challenges everyday and are looking to increase their realm. The urban

consumer has been coddled till now but this market is shrinking, prompting the marketer

to now explore the rural consumers, which promises a huge potential. The market has

enough scale to offer, and enough desire to consume. The consumer in the Indian

hinterland is ready and waiting to be served. The census of India defines rural as any

habitation where the population density is less than 400 per sq. km, and where at least 75

per cent of the male working population is engaged in agriculture, and where there isn't

any municipality or board. Having said that, there are about 600,000-odd villages in

India. Leaving aside Hindustan Lever and ITC, most FMCG Sector would define rural as

any place with a population below 20,000. Similarly, durable and agri-input companies

consider any town with a population below rural, primarily because the adjoining

villagers come to shop there for say a television set. The rural market has been growing

steadily over the past few years and is now even bigger than the urban market. At present

53 per cent of all FMCGs and 59 per cent of all consumer durables are being sold in rural

India. The biggest FMCG Company in India PG derives more than half of its Rs. 12,000

crore revenues from the rural markets. Though there is a high component of sales in some

particular product categories like radios, watches, casette players, the penetration levels

are abysmally low, and therefore, offer tremendous potential for growth.

Explain the significance of development marketing in rural areas

Rural marketing involves delivering manufactured or processed inputs or services to

rural producers or consumers so as to soak up the huge size of the untapped rural market.In today's congested and difficult markets, both local and global, all FMCG as well as

other companies search for new opportunities, consumers and markets. The 800 million

potential consumers in rural India presented both an opportunity and a problem, as this

market has been characterized by unbalanced growth and infrastructural problems. Thus

looking at the opportunities which rural markets offer to the marketers it seems that the



future is very promising for those who can understand the dynamics of rural markets and

exploit them to their best advantage.In recent years, rural markets have acquired

significance in countries like China and India, as the overall growth of the economy has

resulted into substantial increase in the purchasing power of the rural communities. On

account of the green revolution in India, the rural areas are consuming a large quantity of

industrial and urban manufactured products. In this context, a special marketing strategy,

namely, rural marketing has taken shape. Sometimes, rural marketing is confused with

agricultural marketing– the later denotes marketing of produce of the rural areas to the

urban consumers or industrial consumers, whereas rural marketing involves delivering

manufactured or processed inputs or services to rural producers or consumers. Also,

when we consider the scenario of India and China, there is a picture that comes out, huge

market for the developed products as well as the labor support. This has led to the change

in the mindset of the marketers to move to these parts of the world. Dynamics of rural

markets differ from other market types, and similarly rural marketing strategies are also

significantly different from the marketing strategies aimed at an urban or industrial

consumer. This, along with several other related issues, have been subject matter of

intense discussions and debate in countries like India and China and focus of even

international symposia organized in these countries.

Rural markets and rural marketing involve a number of strategies, which include:

• Client and location specific promotion

• Joint or cooperative promotion..

• Bundling of inputs

• Management of demand

• Developmental marketing

• Unique selling proposition (USP)

• Extension services

• Business ethics

• Partnership for sustainability



The marketing mix is the name given to the main demand-influencing variable that are

available to an organisation. This is because, when a customer makes a purchase or

engages in an exchange, what they are responding to is not just the product, but a whole

range of variables which constitute the offer. The classic description of the marketing

mix is ‘the 4 Ps’. The 4 Ps and the fundamental questions associated with them are:

The major marketing management decisions can be classified in one of the following four

categories:

• Product

• Price

• Place (distribution)

• Promotion

These variables are known as the marketing mix or the 4 P's of marketing. They are the

variables that marketing managers can control in order to best satisfy customers in the

target market. The marketing mix is portrayed in the following diagram:

1. PRODUCT POSITIONING

they have strategically decided where their product will be positioned in the market. They

consider ‘position’ held by their cars in the market will be how they want the products to

be perceived in terms of factors such as brand image, value for money, price availability

etc. This is done in relationship to the competitors.

Price is the value (usually measured in monetary terms) that a seller agrees to sell a

product or service for and the value at which the buyer agrees to purchase.

The exchange transaction can either be :

Fixed: the price is given and the buyer either agrees or disagrees;

Negotiable: buyer and seller bargains until a mutual price is agreed;

A Variation: one element may be fixed and the other elements negotiable.

The method used will vary from product to product and from market to market. With

some products the prices may be fixed and no negotiation will take place like in case of

cars

Price the company will charge will greatly affect the eventual level of sales. The price is

an integral part of the product and will perform many tasks in bringing about eventual

purchase. The most important of these tasks is to match the value and the benefits



expectation of the consumer. Too high a price in relation to perceived product benefits,

the customer might think he is not getting value for money and will buy products from

competitors. Too low a price and the customer will think the product inferior and again,

reject it.

2. PRICE AND THE MARKETING MIX

THE RELATIONSHIP WITH THE PRODUCT

There is a continually shifting customer relationship between the price of the product and

added value elements such as branding, quality, after sales support. When looking around

and comparing different products the customer will be continuously balancing price and

product to arrive at what they consider to be the best overall value.

With most products Tooth Toothpaste tries to move the customer towards added value

and away form the price because this has led to greater product differentiation, vis-à-vis

the competition, greater market share and high profits.

PRICE AND PROMOTION

Colgate takes care while using price for promotion purposes. Tooth Toothpaste makes it a

point that price reduction is not used as a promotion technique as it encourages the

purchasers to concentrate on price rather than added value. Also it might lead to

customers only willing to buy a car when prices are reduced.

PRICE AND PLACE

Price charged will also depend on the channel of distribution. Colgate has different price

list for different areas. For example: price in India are less as compared to Delhi and

other states because the Tooth Toothpaste has its producing unit in India and the cost

incurred to reach the dealer is low as compared to rest of the country. Also there different

rules & regulation in terms of taxation.

PRICING OBJECTIVE

Achieve a specific target return on investment or on the net sales

Maintain and enhance market share

Meeting competition

Maximize profits

Stabilize prices



3. Place

Place is another key marketing mix tool, it includes various activities the company

undertakes to make the product accessible and available to the target customer. This

element of marketing mix, can be broken down into two clear categories:

Distribution channel option;

Physical distribution.

Distribution channels are the alternative method that might be chosen in making the

product / service available to the customer for purchase. In simple terms the

channel of distribution is where the customer will expect to see, and be able to

purchase, the product or service.

It is worthwhile breaking channels of distribution down further into two major areas:

1. Direct distribution: Many companies choose to distribute their product directly to

their customers without the use of an intervening organization, known alternatively as

an intermediary or middlemen. Companies opt for this distribution channel because of

many reasons, few of them are –

Maintaining control over all the elements of marketing mix. This will

include the way the product is presented, its selling price, where the

product is offered for sale and how the product is promoted and sold.

Cost : whether there are cost savings in marketing directly rather than

indirectly will depends on the product and the market circumstances.

Superficially there appears to be a saving as selling direct eliminates the

need to pay a percentage amount, in terms of a reduction on expected

selling price, to the intermediary for undertaking some of the marketing

tasks.

Guaranteed outlet: selling directly should ensure a guaranteed outlet for

the company’s product as there are no intervening bodies between the

organization and its customers, refusing to take stock or taking from

elsewhere, and restricting supply. This can be important because of

growing competition and increased intermediary strength.



Building customer relations: Dealing direct with the end-consumer

enables the producer to communicate and build a very close relationship

with the customer.

Focused, specialized attention: A company selling direct can present its products or

services in concentrated and focused way to the customer unhindered by immediate

competitors’ products.

4. Physical distribution is how the product / service actually gets to the customer once

the choice of channel has been made. It involves planning, implementing and controlling

the physical flow of goods and services from the organization to the customer efficiently,

effectively and at the lowest possible cost. Physical distribution can be a very costly

process, in some cases it can be as much as 25 percent of the total costs, and it is an area

where many companies have managed to make huge savings and gain competitive

advantage by lowering costs and making savings in the methods used.

Tooth Toothpaste take physical distribution not as cost but as a way in which company

can gain competitive advantage by offering the customer added benefits, better services

or lowering prices through continuous improvements in the methods used.

Physical distribution is making sure that the requisite goods are available when and

where the customer demands. Tooth Toothpaste has set its distribution objective in terms

of the task that needs to be performed and relate to the overall sales objectives for the product and the channel outlet chosen. Tooth Toothpaste has clearly identified and

broken down the amount that will needs to be delivered to each outlet or delivery point to

meet the agreed sales objective. Tooth Toothpaste has made its objectives



DISTRIBUTION CHANNEL

Distribution in marketing context means the transfer of goods from producer to

consumer, as we all known in a distribution system, we are to first find out what kind of

distribution channels is to be selected so as the firm can get a convenient supply andeconomic maintenance of profit. In Biscuit Industry, where flow of goods, matters a lot, it

is must to consider following points very carefully.

Selection of channels for distribution

Warehousing and transport.

Operational research

Logistic Mix

COMPANIES

SystemIntegrators

Distributors

CUSTOMER

Resellers

Own salesforce

VOLUME

RESELLE

R

Value

Resellers



BCG MATRIX MODEL ANALYSIS

The growth-share matrix is divided into four cells, each indicating different types of

business:

1. Question marks:

Business that operate in high-growth markets but have low relative market shares.

A question mark requires a lot of cash because the company has to spend money

on plant, equipment, and personnel to keep up with the fast-growing market, and

because it wants to overtake the market leaders. The company has to think hard

about whether to keep pouring money into this business. The company in figure

operates three question mark business, and this may be too many. Ford India is a

example of question mark.

2. Stars:

The market leaders in a high-growth market. A star does not necessarily produce a

positive, cash flow for the company. The company must spend substantial funds

to keep up with the high market growth, and to fight off competitors’ attacks. in

figure, the company has two start. Tooth Toothpaste is a example of stars.

BUSINESSG

ROWTH

RATE

RELATIVE COMPETIVE POSITION (MARKET SHARE)

High Low

High

Low

STARSQUESTION

MARK

CASH

COWSDOGS

A



3. Cash cows:

Stars with a filling growth rate that still have the largest relative market share and

produce a lot of cash for the company. The company does not have to finance

expansion because the market’s growth rate the slowed. Because the business is

the market leader it enjoys economies of scale and higher profit margins. The

company uses its cash cows to pay bills and support vulnerable. It this cash cow

starts losing relative market share, the company will have to pump money back

into it to maintain market leadership. Prepsodent is a example of cash cows.

4. Dogs

Business that have weak market shares in low-growth markets. The company in

figure holds two dogs, and this may be two too many. The company should

consider whether it is holding on to these business for good reasons (such as an

expected turnaround in the market growth rate or a new chance at market

leadership). Dabur Lal is a example of Dogs.

After plotting its various business in the growth-share matrix, a company must determine

whether its portfolio is healthy. An unbalanced portfolio would have too many dogs or

question marks and too few stars and cash cows.



PEST ANALYSIS

PEST Analysis may also help examine the differential impact of external influences on

organisations, either historically or in terms of likely future impact. This approach builds

on the identification of key drivesrs, and asks to what extent such influences will affectdifferent organisation or industries differently.

It is useful to consider what environmental influence have been particularly important

in the past, and the extent to which there are changes occurring which may make any of

these more or less significant in the future for the organisation and its competitors. It is

sometimes known as a PEST analysis, indicating the importance of political, economic,

social and technological influences on organisation.

PEST Analysis

A PEST Analysis of the bakery industry with special reference t o Tooth Toothpaste

and Colgate and Prepsodent can be carried out on the following lines:

a) Political / legal

The gort’s policy of employment regarding abolition in any industry has also effected the

Tooth Toothpaste and Colgate and Prepsodent Colgate Industry.

b. Economic

The level of unemployed is constantly or the verge of increase , which inturn has rerelted

in higher inflaturn and no people have low purchasing power. On the other hand the

middle dars people have higher disposable income so they can go in for more of Colgate.

Products

c. Socio cultural factors:

The life style of the people is much that they want very thing ready to eat due to lers time.

And with harvest gold’s new products range it can ratily customess profitally.

Also the income distribution of people allows them to purchase more of Car products.

d. Technology:

The discovery of new technologies used at the harvest gold’s premier ensures that quality

product is delivered to the consumers at the minimum cost andg5reater hygienic levels .

New machines are used for grinding , taking and at last packing.



Product Life Cycle

The pattern of Colgate growth observed elsewhere in the world reveals that the growth in

the market is initially slow followed by a sharp acceleration, but so far that has not

happened in India. As far as the Product Life Cycle is concerned. Indians are at the

beginning of the maturity stage.

Product life cycle of Colgate

Chart No.1 Showing the Product

Lifecycle of Colgate in terms of

Profit

11.8

15.213.9

12.4

0

5

10

15

20

2006 2007 2008 2009

Year

P r o f i t

Profit in Rs.

million



CONCLUSION

There is on doubt that the wrangling between the two dental care market leaders is far

from over. The question now is when will the next salvo be fired by Colgate-Palmolive,

clearly perceived at the receiving end of Hindustan Lever aggressive marketing strategy

and which is waiting eagerly in the wings to retaliate.

Till then the entire country can enjoy the lull before another the next storm breaks out.

In the end it is certain that FMCG co mpanies will have to really gain inroads in the rural

markets in order to achieve double digit growth targets in future. There is huge potential

and definitely there is lot of money in rural India but the smart thing would be to weigh in

the roadblocks as carefully as possible. The companies entering rural market must do so

for strategic reasons and not for tactical gains as rural consumer is still a closed book and

it is only through unwavering commitment that the companies can make a dent in the

market. Ultimately the winner would be the one with the required resources like time and

money and also with the much needed innovative ideas to tap the rural markets.

A mention of rural India may conjure up an image of abject poverty in the minds of many

people. This, however, does not hold true in the case of a few fast moving consumer

goods (FMCG) companies that have over the years been giving their rural operations a

renewed thrust. Why would these companies be tapping into the rural markets in the first

place?

The present day brushing habits of the Indian society as a whole leaves a lot to be desired

- 41 tooth powder are sold for every 100 persons per year! Total units sold add u to a

little over 400 million, growing at the rate of 10% p.a in volume terms and 25% in value

terms (difference explained by the shift to upper end of the market). This implies not

much inroad has been made into the rural and semi-urban market. Non-users constitute

about 65% of total population.

While the global brands try to create new markets and add new dimensions, there is much

greater latent demand.

Out of their stable of marketing strategies, advertising till now had been low priority for

the players (this was confirmed in our survey as 88.9% of respondents don’t recall the



ads). This indicates companies find it formidable to change the low involvement level

psyche of consumers and the route of aggressive sales promotion by way of price offs,

POP displays, tied sales and generous trade margins still hold the key to increasing off

take of tooth powderes.

No one has made a serious attempt in the virgin territory of 65% non-users (CP’s Rural

Van Programme is a recent drive). The thought of doing a Nirma to the tooth powder

market has escaped everyone.

Despite packaging constituting a substantial (upto 40%) of the cost of a tooth powder it

has found to have influenced the purchasing decisions of the buyers. In our survey

consumers corroborated to this effect (refer to the survey findings). Companies could

rethink their strategy of increasing differentiability by packaging and instead invest in

product development for the same.

SUGGESTIONS

Some possible product improvisations

• Attached straight tongue cleaner cased in the tooth powder handle.

• Cartoons character printed on the handle to attract kids.

• Padding on the handle end to massage the gums.

• Casing the tooth powder (for kids) in a toy form.

• Neck with adjustable handle.

⇒ Get a certificate by the Indian Dental Association (IDA) for the tooth powder, like the

Colgate Calciguard Toothpaste.

⇒ Segregate the tooth powder types for different age groups, e.g.,

Children - Thicker handle for better grip, bright colours and cartoons printed on the

handle.

Young People of Teenager - more trendy colours and designs, like stripes or polka

dotted, more vibrant colours.

Adults - Simple designs and sober and decent colours.



For the new entrant

⇒ Introduce the product with the offer of one free tooth powder with the purchase of a

brush which will help in blocking and prepointing the purchase of the buyer.

⇒ As the target segment is the premium segment therefore, premium pricing of the

product is necessary.

⇒ Price the product at Rs. 251 -* or at Rs. 301- and not at Rs. 361 or Rs. 221- because

the shopkeepers face a problem in returning small changes of Rs. 31 or Rs. 31- and

Rs. 11 so they sometimes avoid the product as confessed by the shopkeeper.

⇒ Add value to the product by giving tips on taking good oral care, in the back side of

the package or a free pamphlet with the purchase of a brush, like brushing twice a

day, flossing, polishing, regular dental check-up by your dentist, this shows a caring

and concerned attitude by the company.

⇒ With the purchase of a tooth powder, give a free coupons which is to be filled in by

the consumer and can be used by him or her for getting a free dental check-up as

when and where specified in the advertisement in the newspaper. This kind of

scheme can be implemented by the company once in two three months.

However, these suggestions can be used by the big players in the market or the newentrant, who has to be a big player because a large investment is needed for such heavy

sales promotion and also an attempt should be made to convert this low involvement

product into a high involvement as it is concerned with personal card and hygiene and a

product of daily use.



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rural marketing project marketing strategy

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