MODULE 6 RURAL MARKETING

39.1 PRODUCT STRATEGY

The 1st decision to be made in product strategy in the rural context is
whether the product that is sold in the urban market can be supplied to
the rural market as it is, or whether it must be adapted. The firm should
find out what kind of product is actually required by the rural
consumer.
Economic & income realities of the market should be considered while
developing the product strategy. In addition, socio-cultural realities
should also be considered. When products are designed reflecting both
these influences, the chance of success is greater.

Specially Designed Products

The Tractor/Trailer: It is a product specifically designed for the rural
market. It is designed as a replacement for the plough as a vehicle for
transporting both men & material in the rural areas.
Evereadys Jeevan Sathi Torch: The villagers rejected the original
part-brass torch, as the product was not fully made of brass &
contained little plastic. The firm, after a thorough research, came out
with an all-brass product (slightly at a higher price) & the
communication depicted side-by-side, the 2 Jeevan Sathis (the farmers
wife who is his life-long companion) & the brass torch (another life-long
companion).
Model Variants: Models developed specifically for the rural market
have found more takers in the market. For ex, m/cs that are designed to
take on rigors of rural roads have succeeded more in the rural market.
Color Variants: The rural have their color preferences. In the case of
some products, color may matter very much. Firms can exploit this fact
to their advantage. For ex, Asian Paints introduced paints with bright
colors for the rural markets. Asian Paints also communicated the
feature well through its communication campaigns.
1

MODULE 6 RURAL MARKETING

39.2 BRAND DECISIONS
Branding too needs skilful handling in the rural markets. The rural
consumers have already graduated from generic to branded products.
Today, the brand name is the surest means of conveying quality to rural
consumers. To them, buying an established brand is the sure way of
reducing risk.
Whether the same brand should be used in both urban & rural markets
or appropriate variants of the brand must be adopted for the rural
market, is a matter for conscious decision by individual firms depending
on the context. Low-priced variants seem to work better in a majority of
cases in the rural market.
It will, however, be incorrect to assume that rural consumers prefer
local brands to national brands. Analysis actually shows that contrary
to the commonly held view, many rural consumers have a strong
preference to nationally advertised & promoted brands.

Sell Value Brands, Not Cheap Brands

HLLs Lifebuoy, for ex, is a low-priced carbolic soap that is often the 1st
choice for a rural consumer. HLL sells it as hygiene & not as a cheap
soap. It communicates the value of the brand to the target market.
Rural marketers would do well to add some value to their products if
they are keen to secure the loyalty of the consumers.

Examples of distinct brand offer for the rural market

There are several cases where the firms concerned have launched
distinct brands for the rural buyer & tapped the market better. Arvind
Mills entered rural market with its specially made Ruff and Tuff brand.
Britannia has ventured into the rural market with Tiger brand biscuits
& is steadily gaining market share with this brand.

MODULE 6 RURAL MARKETING

39.3 PHYSICAL DISTRIBUTION TITAN WATCHES GOING RURAL
Initially Titan was mostly confining its marketing to urban & semiurban areas & by the end of 90s, it modified its strategy & started
tapping the rural market in a systematic manner.
Titan carried out a detailed study of the rural market & based on the
findings, developed watches that matched the needs of the market &
also chose other elements of the marketing mix like distribution &
promotion in line with the requirements of the market. It found out
how the rural consumers perceived their watch, what were their
expectations, the price level & service that they preferred.
Titan set up appropriate retail outlets for its watches in the rural
market. It did not replicate its urban market strategy. For ex, it did
not open any glitzy showrooms or outlets of the World of Titan &
Titan Time Zone type. It set up outlets that helped it go close to the
rural buyers. It increased its presence & promotion in villages &
mundi towns, which were the feeder centers to the villages.
Titan also carried out an appropriate shift in its positioning strategy.
When the target market was the elite urban buyer, the watch had
been positioned as a premium product, as jewellery or an ornament
one would like to wear & as a product of fashion & not as a time
telling device.
Titan brought in its new brand Sonata with mainly the rural
market in mind. It was a case of appropriate line stretching to meet
the specific target segment in the rural market. Sonata was
considerably low-priced & was targeted specifically at the lower end
of the market.
Many rural folks from the retail outlets in nearby towns were buying
Sonata quartz watches. This gave the idea to Titan to position the
watch appropriately for the rural market & formulate distribution
& promotion strategies that matched the market.

MODULE 6 RURAL MARKETING

39.4 PHYSICAL DISTRIBUTION
Multiple tiers add to the costs: Unlike urban distribution, rural
distribution involves more tiers in distribution. At the minimum, the
distribution chain in the rural context needs 3 tiers, viz., the village
shopkeeper, the mundi-level distributor & the WS/Stockist/C&F.
Producers who can reach the customers through the shortest
distribution chain can do better in this market.
Non-availability of dealers: Firms find that availability of dealers is
limited & the scope for appointing fresh/exclusive dealers of the
company is equally limited in view of the low demand & nonavailability of suitable parties.
Poor visibility of the outlets: A familiar paradox in rural distribution is
that on the one hand the manufacturer incurs additional expenses on
distribution & on the other, the retail outlets find that the business is
un-remunerative to them! The additional funds the firm pumps into the
system are used by the scattered nature of the market & the multiplicity
of tiers in the distribution chain.
Inadequate banking & credit facilities: It is estimated that there is only
one bank branch for every 50 villages. Rural outlets need banking
support for 3 important purposes:
1. For remittances to principals & to get fast replenishment of stocks
2. For supplies through bank AND
3. For securing credit
Firms have been in search of a low-cost system of distribution with the
W/S serving all the retailers, including the ones at the tail end, & the
latter servicing the consumer. This is the strategy followed by Nirma to
compete with HLL. Nirma relies on the W/S network. HLL is trying to
get around this problem by giving credit to the distributors.
Analysis shows that many firms hesitate to venture into rural markets largely
because of the problems on the distribution front. They find it uneconomic to
operate outlets in rural areas as in their perception, cost of
selling/transportation/sub-distribution/servicing the outlets, are all very high.
4

MODULE 6 RURAL MARKETING

39.5 VILLAGE SHOP KEY TO RURAL DISTRIBUTION
The network of village shops of India is considered as the largest &
cheapest distribution channel in the world. There are 3.6 m such shops
in rural India. The village shopkeeper actually operates against several
odds. He is often forced to deal in a large # of products in order to make
his operation viable. It means larger inventory & higher inventory costs.
The longer lead-time for replenishments from the urban-based
producer enlarges his inventory holding further. Also, as his sales are
not uniform throughout the year, he has to carry the inventory over a
longer period of time. The scope for making up the higher cost through
higher mark-up is limited.
The average daily turnover of a rural shop is Rs >300/-. Even the level
of turnover is generated only when he extends credit to his customers. It
is quite interesting that in spite of all these handicaps, the village
shopkeeper conducts his rural retail operation at a profit. He achieves
this feat largely through his inborn ability for astute management of
money & other inputs.
He also puts in hard work. He keeps his shop open for 14 hours a day
compared to the 8-hour service provided by the urban shops. And he
keeps his shop open on all 365 days in the year, with the support of his
wife & children & ensures that he does not miss a single possible sale. In
fact, it is mainly this human labor, the cost of which neither gets
accounted, nor paid for fully, that makes the village shops of India one
of the cheapest distribution channels in the world.
It is quite natural, therefore, that firms seeking an effective presence in
the rural market, willingly embrace the private village shops as the
major component of their distribution outfit. The shops also function as
their effective bridge with the scattered rural consumers.

The name of the game is to motivate the retailer in rural

markets to stock a product or a brand.
5

MODULE 6 RURAL MARKETING

39.6 HLLS RURAL THRUST AN EXAMPLE
In recent years, HLL has carried out 3 special operations in the rural
markets of India:

OPERATION HARVEST

To efficiently service the channels in an intensive effort to build

volumes. Operation Harvest used in a fleet of vans, which regularly
visited remote villages, with a population of >5000, to restock small
shops with its primary products --- LIFEBUOY & WHEEL.

OPEARATION STREAMLINE

HLLs soaps & detergents division launched this operation. Doubling

of rural market penetration to 10K villages from roughly 50K
villages was the objective.
The exercise meant that HLL would be moving directly into villages,
with populations of > 1000 people & located away from motorable
roads & communications links.

OPERATION BHARAT

HLL also launched a major promotion/sampling exercise in the rural

markets. Code-named OPERATION BHARAT, it covered nearly
22 million rural households across 12 states over a 2-year period.
The objective was to popularize HLLs personal products in small
towns & villages. As part of this campaign, HLL handed out lowpriced sample packets of toothpaste, fairness cream, shampoo (Clinic
plus) & talcum powder (Ponds) to 22 million households.

MODULE 6 RURAL MARKETING

39.7 RURAL SALES FORCE MANAGEMENT
Rural marketing calls for some special traits on the part of salesmen
Willingness to be located in rural areas
Cultural similarity
Attitude factors
Knowledge of local language
Ability to handle several lines
Creativity

Managing rural sales force

In selecting the salesmen, in giving them the orientation, in
motivating them 7 in developing them, the sales manager in charge of
a rural sales force has to make several adaptations.
For example, the sales manager may have to devote a much longer
time in providing orientation to the newly recruited rural salesmen.
Also, mere classroom briefing will not meet the requirements. The
salesmen need comprehensive on-the-job coaching in select village
markets. They need to be educated about the rural marketing
environments in addition to training salesmanship/selling techniques.
Sales force management in the rural context thus becomes an
exacting job, especially when the firm has big stakes in rural
marketing & when it operates on a nation-wide basis. HLL is an
excellent example.
It has the largest network of rural salesmen in the country.
Administering such a large & scattered sales force, supervising them,
supporting them in sales calls, coaching them on the job, attending to
their official & personal problems & above all motivating them for
better results, is by no means an easy task.
7