Rural Product Strategies: Challenges and Solutions

1. 4Ps in Rural Markets Session – III Xavier Institute of Management, Bhubaneswar

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

3. Cont’d

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

6. Cont’d

7. Product Development Stages

8. FMCG Consumption Trends

9. Consumption Ranking

10. Rural Durable Usage Trends • NCAER has classified durables into three categories • Group One( <Rs. 1000) • 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. Cont’d

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

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

23. Melas & Haats

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. Cont’d • Push strategy – sales force and trade promotion • Pull strategy – advertising and consumer promotion

26. Close of Session Thank You