Rural Marketing

Reference New Perspective in Rural & Agricultural Marketing Y Ramkishen Rural Marketing Book Pradeep Kashap & Siddhartha Raut Cases In Rural Marketing An Integrated Approach CGS Krishnmacharyulu & Llith Ramkrishnan

PROFILE OF RURAL MARKET RURAL CONSUMER MARKETING RESEARCH RURAL MARKET RESEARCH RURAL SEGMENTATION TARGETING & POSITIONING RURAL MARKETING STRATEGY
RURAL PRODUCT RURAL PRICE RURAL DISTRIBUTION RURAL SALES FORCE MANAGEMENT RURAL COMMUNICATION

What is Rural ? Government agencies like IRDA (Insurance Regulatory And Development Agency and NCAER (National Council for applied Economic Research) define Rural as villages with a population <5000 with 75% male population engaged In agriculture etc

Census Towns are actually rural areas but satisfy The following criteria Minimum Population>=5000 75% of the male population engaged in Non agri activity RBI Location with population up to 10000 Considered Rural Semi Urban 10000 to 100000

NABARD All locations upto a population of 10000 Will be considered Rural Sahara All locations having shops/establishments Upto 10000 (not population related) are Treated as Rural LG Elect. The rural and semi urban area is defined As all cities other than major metros

Concept of Rural from the perspective of marketing has Indeed been dynamic.- gradually changed over the times Was not India a so called Village/Rural for the world a couple of decades back

What is Rural Marketing ?

Developing of the market in the area as defined as Rural Hence it could be aptly said that it encompasses the Activities such as developing the process to meet this Objective Right product at the right price to the right people at the right time. Exchange between rural and Urban is a Factor . 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 areas /abroad Better exposure - media

Great success stories

HLL
Colgate LG Dabur Videocon Cadburys

50%
50% 50% 40% 40% 25%

Asian Paints 60%

Hero Honda 40%

Source ORG Marg and Fransis Kanoi

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 basis

Reputed Companies helping in changing lifestyles Levers ,Britania

,Dabur,LG,Honda,Videocon Media creating an impact-creating awareness levels

Government Policies White Revolution Milk products

Yellow Revolution (poultry and edible oils) Blue Revolution Aqua culture

Employment Schemes JRY(Jawahar Rojgar Yojna, Small Industries Training,

Rural Electrification, Spend on Health and Sanitation, Medical and Health,

Primary Education, Credit card for farmers Waiver of Loans Initiatives by leading organization in spreading awareness Hindustan Levers, Shakti, ITC Reliance etc.

Move to Rural Market encouraging Data

Rural India buys
Soft Drinks approx 45% of all soft drinks Almost 50% motor cycles Approx 55% of cigarettes Half the total market for TV, Fans, pressure cooker, bicycles Washing soap, tea, blades, salt, toothpowder Coca Cola is growing over 35% in Rural areas compared to Over 22 % in Urban

According to Hansa Research , a market research firm that Has published a Guide to Indian Markets 2006 Consumer durables in Indian Villages risen sharply TV 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 Agricultural Income

Acute dependence on monsoon

Consumption linked to harvest

Infrastructure problems - Roads, power

Low awareness
Communication- difficult & expensive Too many languages Geographic Spread

Urban & Rural Markets

Key Differences

Per capita Income Disposable Income Literacy levels Infrastructure Communication Geographical Spread Customer has many choices

Characteristics of Rural Population

>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 Managers

>Occupation 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 Class The Middle Class The Poor RURAL CONSUMER BEHAVIOR How does an individual decide to spread his Available resources (time,money effort) on Consumption-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

Very Rich

Well Off

Climbers

Aspirant

Poor

Simple Model of Rural Consumer Behaviour

Stimuli
Inputs to any senses Products Package Commercials Brand image Reference Information cues about the characteristics of the product

Attitude
>Consumer belief Consumer feelings

Factors that Influence Rural Behaviour

Perception
Depends on

Exposure
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) I

Interpretation
Iodex muscular pain Reliever used on animals After hard days work in MP Godrej hair dye on Buffaloes To make them look better in Village haats in Raichur

Key Challenges
4As Awareness Affordability Availability Acceptability

4 Ps Promotion Price Product Place

RURAL MARKET RESEARCH

Marketing Research is a formalized means of obtaining Information 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

Primary Sources Retail shops/STD booths Tea Stalls Playgrounds/schools Chaupals (meeting point
old/middle aged/ influential) Haats & Melas Influence Group Secondary Sources Government website www.censusindia.com www.indiastat.com www agroindia.com Private 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 othermatters 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

RURAL MARKET SEGMENTATION TARGETING & POSITIONING

SEGMENTATION Very Varied hence proper segmentation very essential

Geographic: Region North, East, West and South Village size Climate Psychographics (consists of psychological: sociology: anthropological) Lifestyle - Rigid ,changing attitude, urban influence Personality - Authoritarian, Ambitious Behavioral Occasions Regular, special occasion Benefits - User status regular user, first time user, non user Usage rate - Light, medium, heavy Loyalty - None, medium, strong Attitude to product - positive, negative, hostile Demographic Age Family Size Gender Income Occupation Education Caste

Different variables could be used.. multilevel segmentation

DEVELOP THE PROFILE

Select the Target Market Evaluate the Market Evaluate the Segment
size growth rate profitability accessible compatible with firms resources & capabilities

TARGETING >Select Target Segment >Formulate Market a marketing strategy for the target market POSITIONING One shoe fits all! !! ! . Everything for Everyone !!! It is Something for Someone How to Position USP of the product uniqueness of the product Special needs either address partially/ unaddressed Noticeable gap in the products available Positioning Concept Study the possible motives of the rural customer Then figure out how to appeal to them (USP, Price Quality Uses, Class, Culture etc.) Select & Develop the Concept Bridge gap between the product and the target market. Communicate the Concept Advertise and Reach (Media) Offer Product After STP (Segmentation, Targeting and Positioning) Post Sales Feedback & After Sales Service

RURAL MARKETING STRATEGY

New Entrant Company starts Rural Market first & then ventures in Urban Market

(eg Cavin Kare Chik & Meera Shampoo)

ENTERING THE RURAL MARKET 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]

Purpose

R - Retain G - Grow A - Add

To the market

DEVELOPMENTAL MARKETING
Developmental marketing is a process through which awareness 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 Hyndai from Rural/Semi Urban areas)

Awareness

Trial
Purchase Post-Purchase Satisfaction
Colgate program Operation Jagruti Switch from Charcoal to Colgate tooth powder HLL Free samples of Lifebuoy Cavin 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 require Battery/electricity you wind it with a lever and radio runs For approximately 30 min. ]

1.FMCG (HLL, Dabur, Marico, Colgate=Palmolive Coke, Pepsi) 2.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 ) 3.Services Telecom, Banking, Health care ,Insurance (Airtel, BSNL, SBI, PNB,Dena bank,) 4.Agri-inputs Seeds, pesticides, tractors (Rallis India, Bayer,)

Points to note
Rural Products
Easy to Use After sales support Conveniently packed- success of Sachets Product literature to be simple Have a logo easy to identify eg Thums Up

Rural Packaging
Packaging material plastics, poly packs, unbreakable materials Looks - attractive colors (like all tea companies) Size and convenience- small is beautiful

Rural Branding
1. Brand Name 2 Create Brand Identity 3 Enhance Recognition 4 Build a Brand Image 5 Countering Spurious brands Look alike Spell alike Duplicates

Enhancing Brand Strategies with Social Perspective

Soaps for Hygiene Cooking gas for environment Creating need by more awareness Partnering with a long term perspective requires total belief and Commitment - 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 PRICE
Pricing 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 PRICING
Cost Plus Pricing = cost of product +distribution +profit Value Pricing (VFM-Value for Money) High Benefit Power Price eg Re 1, Rs 2, 3, 5,10 Penetration Price Introduce at low and hike price after success Differential Pricing Different price for different market

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 Warehousing Cooperatives Rural Godowns

Rely on Private Village Shops Supply Chain Stores Rural Super Market Small companies tie up with large companies Leverage/Syndicate Distribution network of Marico to sell Tide by P&G Satellite Distribution WholeSaler Town D-dealer SD- Sub Dealer R-Retaile

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

Additional traits for making it Big in Rural Areas Willingness to work in Rural Areas Adopting to cultural differences Down to earth approach Fluent in local language Developmental approach Create not only Communicate

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) T.V /Cable network Satellite Channels Radio Print Cinema/ Theatre Word of Mouth Video on Wheels Traditional Media (Non Conventional) Puppet Shows Folk Theatre/Opera Demonstration Haats and Mela Wall painting Post card and posters Booklets/Calendar

Mass Media Advantages >Excellent Reach Less expensive ,wider coverage

Disadvantages
At times unnecessary coverage No customized messages Companies using this medium Levers, Onida, Videocon Mahindra Tractors, Eveready

Traditional Media Advantages > High involvement High Interest Localized administered at low cost Disadvantages Coverage Repeat /Re enforcement Skill of performer Companies using Bajaj, Levers, HUL, ITC