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Introduction to Rural Marketing

Introduction to Rural Marketing . Why should we do this course? . Agriculture’s share in GDP is going down, but, India still lives in her villages Urban markets are crowded and saturated The understanding of “rural” is diffused and sometimes confusing

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Introduction to Rural Marketing

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  1. Introduction to Rural Marketing

  2. Why should we do this course? • Agriculture’s share in GDP is going down, but, India still lives in her villages • Urban markets are crowded and saturated • The understanding of “rural” is diffused and sometimes confusing • Is “rural marketing” different from “urban marketing” ?

  3. Objectives of Rural Marketing • Conceptual clarity about fundamental Rural Marketing concepts: Rural and Rural Marketing. • Learn about evolution of Rural Marketing in India • Comprehend the Rural Marketing process as Rural Marketing Model • Comparative analysis of Rural vs. Urban Marketing • Marketing strategies

  4. Defining Rural India

  5. Contd… Source: The Rural Marketing Book- Text & Practice, Kashyap. P and Raut. S ( 2007)

  6. Rural Marketing • Planning and implementation of marketing function for the rural areas. • It is a two way marketing process, which encompasses the performance of business activities that direct the flow of goods from urban to rural areas (for manufactured goods) and vice-versa (for agriculture produce) and also within the rural areas (Gopalaswamy, 2005).

  7. Contd… • It is a distinct specialization of marketing discipline, which encompasses customized application of marketing tools and strategies to understand the psyche of rural consumer in terms of needs, tailoring the products to meet such needs and effectively delivering them to enable profitable exchange of goods and services to and from the rural market.

  8. Marketing perspective in Rural Market

  9. Key Concepts Marketer : one who seeks response to an offer which he makes to a person Consumer : a person who uses a product to derive satisfaction Demand : willingness to buy, supported by ability to pay.

  10. Contd… Competition : existence of actual and potential rival companies, which manufacture perfect or close substitute product offerings to attract consumers. • Generic – product vs. product • Form – different products with similar benefits • Industry – different companies with same products • Brand- brand vs. brands of same product

  11. Goals of Marketing • Profitability- Revenue maximization, cost minimization • Growth – sales growth, product /market development Market penetration Diversification • Market standing – Innovation, leadership, consumer satisfaction • Image- Brand image, company image

  12. Aspects to be considered to achieve the goals Organizational structure : designed by function, by territory, by market, by customer, by project or by matrix Leadership skills : provides vision and secures creative follower ship and integrated operation Strategic management : Competition, market, product and consumer.

  13. Organizational structure M.D By function G.M Finance H.R Product Marketing Market research Marketing planning Advertising Promotions Sales Public relations

  14. Organizational structure M.D By Territory G.M Finance H.R Product Marketing Western Region Southern region Central region Eastern Region Northern region

  15. Organizational structure M.D By Product G.M Finance H.R Product Marketing Detergents/toiletries Chemicals Foods Animal feed

  16. Organizational structure M.D By markets G.M Finance H.R Product Marketing Domestic Export Institution Households Government

  17. Organizational structure M.D By customers G.M Finance H.R Product Marketing Men wear Women wear Kids wear

  18. Organizational structure M.D By project G.M Finance H.R Product Marketing Project A Project B Project C

  19. Organizational structure M.D By matrix G.M Finance H.R Product Marketing Market research Advertising Sales Project A Project B Project C

  20. Leadership skills In the quest of good leadership Leadership : clear theme Structure : suitable for operation and goal Functional efficiency : peoples skilled and trained Coordination : coordination and interaction

  21. Strategic Management Marketers are in four battle situations • Competition : gaining victory over competitive firms • Market: Operating through market life cycle • Product : evolving strategies through product life cycle • Consumer: Tracking customers, value expectations and satisfactions

  22. Market life cycle :market crystallization –a latent market comes into light with consumer preferencesmarket expansion- grows with first entrant and late comersmarket fragmentation –attains maturity due to intense competition

  23. market consolidation-during fragmentation one or two introduces new product and will emerge as winners. Markets get consolidated with few big players with stable market shares market dissolution- market dissolves as the existing technology and product becomes obsolete.

  24. stages StrategyIntroduction basic product, heavy sales promotion selective distributionGrowth Product extension, warranty offer, penetration pricing, moderate sales promotion Product life cycle

  25. Contd… • Maturity Diversify brands, competitive pricing, intensive distribution, moderate sales promotionDecline Phase out weak items, lower price, selective distribution, minimal sales promotion

  26. Challenges to Indian Marketer • The gradual opening up of Indian economy to foreign companies • The increasing number of cross-border corporate alliances • The growth of global brands in Indian Markets • The rapid dissemination of global life styles • The emergence of attractive rural markets

  27. Rural IndiaA Promising Market place

  28. India

  29. India

  30. Definitions • Rural and Urban Areas • The conceptual unit for urban areas is a 'town', whereas for the rural areas it is a 'village.' The classification of an area as an urban unit in Census of India 2001 is based on the following definition: 1. All places declared by the state government under a statute as a municipality, corporation, cantonment board or notified town area committee, etc.

  31. 2. All other places which simultaneously satisfy or are expected to satisfy the following criteria: • A minimum population of 5,000 • At least 75 per cent of the male working population engaged in non-agricultural economic pursuits: and • A density of population of at least 400 per square kilometer (1,000 per square mile) • 3. Any area, which is not covered by the definition of urban, is rural.

  32. Demographic profile • Rural India is generating more than half of national income. • 41% of Indian middle class homes and 58% of disposable income exist in rural India. • Income contribution of 55.6% to the national income by rural population of 74.6 crore is higher than urban India’s with 25.4 crore people contributing 44.6%.

  33. Contd… • 75% of the households in the country had an electricity connection. The majority of rural households are not having electricity. • India’s infant mortality rate of 75 per thousand live births is one of the highest in the world. • Access to potable water, health care, sanitation and shelter are a far cry, particularly in the rural sector.

  34. contd… • Largely working as farmers or agricultural workers • Have limited education, may well be illiterate This leads to linear and simple thinking, abstract logic tends to go over their heads • Either live in joint (extended) families or have only recently formed nuclear families

  35. The ground realities! The Rural Consumer

  36. Why rural?

  37. 1. Huge business opportunities… • Rural consumers constitute about 72% of India’s population

  38. 2. No single-national competitor • Marketers have, so far, concentrated on the top-end consumer • Therefore, this segment is largely dominated by proxy products and local/regional/duplicate/fake brands

  39. Who is the rural consumer?

  40. Shopping behaviour • Buy small quantities - more frequently • Unit price is critical, particularly as many of them are daily-wage earners • Look for ‘acceptable performance’/ functional benefits / paisa vasool paradigm (good in relation to current product) at a reasonable price • “Tran creation” of packaging critical • Flash price of pack wherever feasible

  41. Shopping behaviour • In their own way, good at arriving at a cost per dose (or cost per month) equation: even if not expressed mathematically • More sensitive and alert to ‘value’ • Make high-volume purchases at weekly village markets • Haats • Build personal acquaintance with neighbourhood retailer • Often trust the retailer who does influence brand choice • Frequently get ‘credit’ from the retailer

  42. Shopping behaviour • Word-of-mouth, very important and credible • Mass driven • Buy products that are perceived to be popular: the ‘bandwagon’ effect • Try to minimise their risk: tend to be stronger creatures of habit

  43. Shopping behaviour • High awareness of range of consumer brands - but propensity to actually purchase premium performance brands is low • Still influenced by popular idols/role models such as movie stars, famous sportsmen, etc

  44. Collectivism(As opposed to individualistic) • Adhere to prevailing social norms: the community they live in is very important and their behaviour is usually consistent with the community’s shared beliefs and norms • Enjoy social gatherings: women’s associations, celebrations, events, etc

  45. Collectivism(As opposed to individualistic) • Spend a lot of their free time chatting and gossiping with neighbors: both as a source of entertainment and information • Tend to be suspicious about people outside the community • Follow opinion leaders: school teachers, priests, religious leaders, urbanized relatives, local politicians, the village head

  46. Other beliefs • Strong belief in ‘fate’ and ‘luck’, religion and God • Active participation in religious activities • “Cleanliness is next to Godliness”

  47. Rural India Myths & Reality

  48. Myth • One family, one brand - there's one brand for the whole household. • Rural consumers aren't worth bothering about since they buy loose, unbranded products rather than the branded variety. In branded they buy only inexpensive brands.

  49. Reality • The ORG study shows a high preference for branded products. In 18 categories, branded consumption accounts for 80% of sales. eg: toilet soaps, washing powders, analgesics, safety razor blades, toothpastes, shampoos, batteries, rubs and balms, skin creams, toothpowders, toothbrushes, antiseptic creams, antiseptic liquids, digestives, mosquito repellants, shaving preparations, tube lights.

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