Professional Documents
Culture Documents
Product
Anything that has a value in exchange Product price place promotion Challenges Availability, affordability,
Promotion
Awareness
Contd
Simplicity is key
Sense & Simplicity Phillips Global Campaign Urban market successes could be rural market failures Appropriate new product development processes
Product Levels
CORE BENEFIT
BASIC PRODUCT
EXPECTED PRODUCT
Contd
Product Level Characteristics Example Rural Vs Urban
Core Benefit
Basic Product Expected Product
Entertainment
Television Set Digital sound, flat screen Battery Operated TV Jolly Startek TV
Same
Same Appearance of differences in expectations Pleasant surprise for rural customer Uniquely rural value proposition
Marketing Activities
for new product ideas
Select
the most promising ideas and drop those with only limited potential. Study the needs and wants of potential buyers, the environment and competition.
Describe
Concept Testing
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.
Assess
Business Analysis
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.
Determine
Product Development
technical and economic feasibility to produce the product. Convert the product idea into a prototype. Develop and test various marketing mix elements.
Conduct
Test Marketing
market testing. Determine target customers Reactions. Measure its sales performance. Identify Weaknesses in product or marketing mix.
Make
Commercialisation
necessary cash outlay for production facilities. Produce and market the product in the target market and effectively communicate its benefits.
723 663
579 324
394 352
314 67
Consumption Ranking
Rank Rural Product Urban Product Rural HH Consumption grams / month 268
Toilet Soap
Toilet Soap
2
3 4 5
Washing Powder
Packaged Tea Biscuits Detergent Cake
Biscuits
Washing Powder Packaged Tea Detergent Cake
950
268 302 893
Source: A.C Nielsen Retail Audit, MAT, July -2004 & ORG- MARG Retail Consumer Panel, 2001
attributes, branding, packaging, labeling and product support services Attributes such as: Quality Features Design and style
system, Chotukool, mainly aimed at the rural Indian market. Unlike the normal refrigerators that run with the traditional compressor-based cooling system, the battery-powered Chotukool cools the raw food products with a specially-developed chip. The refrigerator, worth Rs 3,500
products price priced within a certain range targeted at the same customer group distributed through the same channel Product mix is a set of all product lines and items offered by a company
Depth extension
Evereadys (Union carbide) Jeevan Sathi brass torch is another example of successful rural specific product strategy. Initially Evereadys brass torch was not picking up well in the rural areas. Union Carbide launched a market research study for locating the reasons. The study by the ad agency OBM found that the rural folks rejected the torch since all its parts were not made of brass. The design, developed abroad, had given the products certain plastic parts, like the reflectors. The Indian rural consumer felt that the plastic parts would not be durable. OBM also found out that the rural people were prepared to pay a higher price for the same torch if it were made all brass.
Eveready then introduced for the rural market the all brass torch designed to last life long and
positioned it Jeevan Sathi as a life long companion. It also came up with Jeevan Sathi communication campaign matching to product strategy. The communication depicted side-by side, two Jeevan Sathis (the farmers wife who is his life long companion) and the brass torch (another life long companion)
market have found more takers in the market. For instance, motorcycles that are designed to take on the rigors of rural roads have succeeded more in the rural market
Color variants:
The rural consumers differ from their urban cousins in color
preference In the case of some products, color may matter very much. For example in the paint business, Asian paints understood the substantial difference between the urban and rural buyer in color preference. AP introduced paints with bright colors for the rural markets. AP also communicated the features well through its communication campaigns.
Packaging
Associated with affordability -
product protection
Packaging material, size, convenience and
aesthetics
Example: Chik Sampoo
Package Development
Contd
urban areas. It has launched Apollo Reach . Through this, it plans to open 25 hospitals by 2010. The Apollo Group is not satisfied with its position in the urban healthcare market. It is now focusing on the rural and semi-urban markets, especially Tier-II cities. It's looking to invest Rs 1,500 crore through its latest venture Apollo Reach to set up 25 hospitals in these areas by 2010. The cities in focus are Karaikudi, Nellore, Karim Nagar, Trichy, and Chittor for starters. A new focus brings with it promise of cheaper healthcare.
The Shaan is a modern multi-utility tractor with the ideal combination of looks and performance that
will helps with more than just agriculture its multi-utility design
balance bank account program for villagers. Called the SBI Tiny account, there are no physical branches or officials, just a paid volunteer who is equipped with a small box and a cellphone. The box enables biometric measurements (fingerprints), at the time of opening the account to confirm the account holder's identity. The cellphone enables communication with the zonal office to check on available balance. Payments under programs such as the NREGS and pensions are made directly to these accounts. The advantage for the villagers is that they can withdraw money from their accounts at any time of the day or night.
Fair Glow and Godrej (soap) in 50-gram packs, priced at 10 cents; Adidas and Reebok increased their sales by 50% in rural markets by reducing prices machine without a drier for US$60; Philips launched a lowcost smokeless chulha(stove); DCM Shriram developed a low-cost water purifier especially for rural areas
a customized TV (cheap and capable of picking up lowintensity signals) for the rural markets and christened it Sampoorna. It sold 100,000 sets in the first year; Coca-Cola provided low-cost iceboxes as regular power outages meant families could not depend on refrigerators
markets Good quality, value for money and sense of identity with brand act as key determinants of FMCG brands in rural India. Better finish and good looks, recommendations from retailers were found be key determinants of a consumer durable brand in rural India.
with colours, numbers and visuals and not necessarily with the name of the brand Colors Lal dhant manjan, lal sabun (lifebuoy), red battery Numbers Godrej No. 1 soap. 555 detergent bar. Brooke bond A1 chai Visuals 3 Roses tea, Cycle agarbhatti
1. Everyday battery with a cat symbol rural consumers remember it as billi wali battery. 2. Lifebuoy soap rural consumers remember it as lal saboon 3. Mahindra tractors brand Bhumiputra 4. Slogan of Red Label Tea jiyo mere lal proved very effective to promote sale.
Shree Ultra
Shree Ultra is a flagship brand, contributing to more than half of our sales volume and is the first manifestation of our strategic move from commodity to brand marketing. Its two variants, Shree Ultra OPC and Shree Ultra Jung Rodhak Cement are distinctly positioned in the market Shree Ultra Jung Rodhak Cement through its unique rust prevention properties, has high acceptance amongst brand influencers (masons etc.) and high brand recall value. The brand, while enhancing its presence in highly educated markets of Delhi has increased its reach in the interior markets of Madhya Pradesh, Uttrakhand, Uttar Pradesh and Punjab.
LIC Jeevan Bhima Gram Brand loyalty is low in low involvement product but very high in case of chyavanprash, skin creams, hair oils and shaving creams Regional brands also have a high brand loyalty
brand name at a cost of few thousand rupees and sold it in the rural market. This duplication takes place in all sectors and especially in FMCG, food items and medicines.
the fake products bear the identical name of the original product, its packaging, graphics, color pattern, design and even same name and address as the genuine manufacturer A pass-off product is one that comes with a few minor changes from the original product. The slight changes are made to avoid legal problems.
Example: Head and Shower Head and Shoulder Pantane Pantene Sunmilk Sunsilk Lifebuoy Loveboy Climik Plus Clinic Plus Parla G Parle G
Vikas Vicks
Questions What were the critical success factors for Coca Cola in rural markets? Identify two major brands which adopted a similar pricing strategy to crack rural markets
product or service The price of a product is significant for the following reasons: > It indicates the market value of the product > Price gives an image to the product > Price is a major tool of marketing in designing offers for consumers to be high quality goods > It helps consumers determine their status
product can have To generate sales, revenues and profits for the firm To stay competitive in the market
Pricing objectives
Pricing decisions are important for
estimating demand, promoting sales, creating revenues and profits and outwitting competitors
Profit objectives
Profit maximization This goal is employed by firms that have
made substantial investments and have short pay back periods to recoup Innovative product firms that have limited period of protection from imitators will follow this goal Traders dealing with perishable goods also follow the same strategy
Profit objectives
Target Return This is common among firms operating in a
competitive world Securing maximum sales without sacrificing profitability Need for funds for expansion Desire to recover investment early Mitigating competition Management attitude of win - slow
Sales objectives
Many organizations state their pricing
objectives in sales related terms such as: Growth in absolute sales Growth in market share
Competition objectives
Some firms set pricing objectives in relation
to the action of competitors. This may be done: To meet or prevent competition To destroy competition
Development objectives
Firms pursue development objectives by
diversification strategies by: Expanding existing markets Entering into new markets
Pricing strategies
Pricing issue in rural markets is closely related
to positioning and packaging Competition is generally with the unorganized sector Its not true that cheaper brands sell in rural markets Farmers prefer Ushas premier century brand, though it is priced 20 percent higher
Absolute amount is more important than the content Pricing should be based on the consumers ability to pay for all the necessities from the wages earned Pricing is there fore influenced by income stream and consumption
for money Consumers still do not perceive the premium value of brands, they are happy to deal with basic products Compares a products price to a reference price considered reasonable for a certain type of product
Setting the price for rural products and services (Pricing policies)
Internal factors > Cost - Promotion cost - Distribution cost > Pricing objectives of the company
Product Mix pricing Strategies Optional product pricing Captive product pricing Bundle pricing strategy
Skimming pricing
A pricing strategy where in a company
charges the highest initial price that customers will pay for the product As the demand of the first customer is satisfied company lowers the price to attract another set of customers Eg: Tide
along with the main product Helps to bring customers who are not inclined to buy high value products This pricing method allows companies to present a low base price that is capable of attracting customers while maintaining the possibility of generating high customer revenues by selling costly add-ons later
along with the main product Producers of captive products often price the main product low and then set high markups on the supplies or expendable products. According to Kotler many companies make very low margins on the main products but are able to make very high margins on the expendable secondary products
Bundle pricing
HUL is planning to bring out branded packs
called Bharat,' targeted at the rural hinterland pegged at Rs 25 The pack would comprise smaller SKUs costing Rs 4-5, and consist of toothpaste, shampoos, powder and soaps
has announced its "Magic Box" offer, essentially a bundled handset offer on two of its newest handsets; the Vodafone Black & White, and the Vodafone Color. Under the "Magic Box" offer, the two handsets come with an array of services at no additional cost to the consumer.
They bundle a free pre-paid Vodafone connection with six months validity; one month free subscription for Caller Tunes; one month free subscription for Vodafone News Alerts (national and regional); Rs 50 worth of talk time free; two Bonus cards with very low call rates; and a two-year replacement warranty.
Price adjustment strategies > Discounts and allowance pricing Freebies Special event pricing Economy pricing Value pricing Psychological pricing Discriminatory pricing
is a community kitchen shared by several households of one village- a modern version of the traditional sanjha chulla. Centrally located in a target cluster of a selected village, the Rasoi Ghar is a ready kitchen set up in a pucca house, allowing several villagers at a time to cook their daily meals comfortably, safely and quickly. Each rasoi ghar is equipped with an adequate water supply; a cooking slab; basic cooking utensils and a minimum of 2 stoves connected to replaceable LPG cylinders.
component of the HPCL effort to extend LPG use throughout rural households in India. The costs of setting up each Rasoi Ghar is covered by HPCL, with users being charged an average of Rs.4/hour to meet the refill costs of a cylinder- a cheaper daily alternative to having an individual LPG connection installed in ones home.