1. SESSION III XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR 4Ps in Rural Markets

2. Product

• Anything that has a value in exchange

• Product price place promotion

• Challenges Availability, affordability, acceptability & awareness

Source: The Rural Marketing Book- Kashyap. P & Raut. S Marketing Tools Marketing Challenge Product Acceptability Price Affordability Place Availability Promotion Awareness

3. Contd

4. Appropriate Product Strategies

• Existing & New Products

• Product features service quality price & performance relationship

• Simplicity is key

• Sense & Simplicity Phillips Global Campaign

• Urban market successes could be rural market failures

• Appropriate new product development processes

5. CORE BENEFIT BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT Product Levels

6. Contd Product Level Characteristics Example Rural Vs Urban Core Benefit Fundamental benefit/ services Entertainment Same Basic Product Benefit/service into tangibles Television Set Same Expected Product Attributes & conditions buyers normally expect Digital sound, flat screen Appearance of differences in expectations Augmented Product Exceeding customer expectations Battery Operated TV Pleasant surprise for rural customer Potential Product Encompassing all augmentations & transformations Jolly Startek TV Uniquely rural value proposition

7. Product Development Stages Stage Marketing Activities Idea Generation

• Searching for new product ideas

Idea Screening

• Select the most promising ideas and drop those with only limited potential. Study the needs and wants of potential buyers, the environment and competition.

Concept Testing

• Describe or show product concepts and their benefits to potential customers and determine their responses. Identify and drop poor product concepts. Gather useful information from product development and its marketing personnel.

Business Analysis

• Assess the products potential profitability and suitability for the market-place. Examine the companys research, development, and production capabilities. Ascertain the requirements and availability of funds for development and commercialisation. Project ROI.

Product Development

• Determine technical and economic feasibility to produce the product. Convert the product idea into a prototype. Develop and test various marketing mix elements.

Test Marketing

• Conduct market testing. Determine target customers Reactions. Measure its sales performance. Identify Weaknesses in product or marketing mix.

Commercialisation

• Make necessary cash outlay for production facilities. Produce and market the product in the target market and effectively communicate its benefits.

8. FMCG Consumption Trends Products Urban( 1000 HH) Rural ( 1000 HH) Toilet Soap 998 992 Washing Cake 980 950 Cooking Oil 968 952 Hair Oil/ Cream 897 787 Tea 876 758 Toothpaste 822 449 Washing Powder 819 576 Electric Bulb 723 394 Shampoo 663 352 Biscuits 579 314 Health Beverages 324 67 Source: National Council for Applied Economic Research, 2002

9. Consumption Ranking Rank Rural Product Urban Product Rural HH Consumption grams / month 1 Toilet Soap Toilet Soap 268 2 Washing Powder Biscuits 950 3 Packaged Tea Washing Powder 268 4 Biscuits Packaged Tea 302 5 Detergent Cake Detergent Cake 893 Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail Consumer Panel, 2001

10. Rural Durable Usage Trends

• NCAER has classified durables into three categories

• Group One(

• Group Two( Rs.1000- 6000)

• Group Three( >6000)

• In group one the growth is as high as 75 percent

• Electrical goods show the highest urban- rural disparity, why ?

• Television( B & W) 195/1000HH in rural Vs 490/1000HH in urban

• Colour TVs 48/1000 HH in rural Vs 304/1000HH in urban

11. Packaging

• Associated with affordability - Convenience - Consumer recognition & product protection

• Packaging material, size, convenience and aesthetics

• Example: Chik Sampoo

12. Corporate Responses to Fakes

• Look-alikes- Spell-alikes & Duplicates

• Prices range from MRP to 60 % of MRP

• Margins range from 60 % to 300 %

• Legal action awareness programmes New Package Development

13. Fakes: Some Examples

14. Contd

15. Pricing

16. Issues in Pricing

• Internal & external factors

• Selecting pricing methods

• Pricing adaptations

• Low price points Simple packaging utility around packaging material

• Highlighting value

17. Price Adaptations ( Indicative)

• Product sharing services, Example: Tractors

• Product Bundle pricing, Example: HUL Operation Bharat

• Free gifts may sometimes not work in rural areas

• Special event pricing- Hero Honda Rs. 500 campaign

18. Colgate- Cibaca

19. Place- Rural Distribution Challenges

• Large number of small markets

• Dispersed population and trade

• Poor connectivity

• Low availability of suitable dealers

• Inadequate banking/ credit facilities

• Poor product display and visibility

• Poor communication of offers and schemes

20. Levels of Distribution Level Partner Location 1 Company Depot/ C & FA National/ State level 2 Distributor/ Van Operator/ Super Stockist/ Rural Distributor District level 3 Sub Distributor/ retail Stockist/ sub stockist/star seller Tehsil HQ, towns and large villages 4 Wholesaler Feeder towns, large villages, haats 5 Retailer Villages, haats

21. Distribution Adaption( Indicative)

• Hub and Spoke Model, Example: Coca Cola

• Use of Affinity groups, Example: Project Shakti

• Haat Activation, Example: Colgate

• Syndicated distribution, Example: Cavin Care & Amrutanjan

• Use of marketing co-operatives, Example: Warna Bazaar in Rural Areas

• Mobile traders, Example: FMCG companies

22. Promotion- Adaptations for Rural Markets Conventional Non- Conventional Personalised Television Haat and Mela Direct mailer Radio Folk Media( puppet and magic show) POS (demonstration, leaflet) Press Video Van Word of mouth Cinema Mandi Interpersonal communication Outdoor: Wall Painting, Hoarding Animator

23. Melas & Haats Melas Haat

• 25,000 melas

• Companies can concentrate on the top 100 melas

• Pushkar Mela in Rajasthan

• Organised by the state veterinary department

• Product sales, promotion, demonstration and database generation

• Cultural activities and rural sports

• Periodic markets located in larger villages(> 40,000)

• 10 50 villages are serviced

• Sunday markets are most popular

• Average number of outlets is 315 and average daily sales is about Rs 2 lakhs

• Traders participate in at least 4 haats

• 81 percent of the visitors are repeat customers

24. Types of Promotions

• Advertising

• Sales promotions coupons, contests, demonstrations and sampling, Example: Tata Shaktee Haat Hungama

• Direct marketing, Example: Videocon

• Publicity, Example: Project Shakti and AP Online

• Using a direct selling through a sales force, Example: Swasthya Chetna for Lifebouy

25. Contd

• Push strategy sales force and trade promotion

• Pull strategy advertising and consumer promotion

26. Close of Session

• Thank You